IC-NRLF 


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LIBRARY 

OF  THE 

UNIVERSITY  OF  CALIFORNIA. 


OK 


Received 
Accession 


NATURAL    LAW   OF    MONEY. 
INTERNATIONAL    BIMETALLISM. 
11  FREE    SILVER." 
CURRENCY. 


THE   SILVER    QUESTION 
AND   HARD  TIMES. 


BY 
JOHN   J.  VALENTINE. 


A  coin  is  just  as  bad 
when  debased  by  overvaluation, 
if  not  exchangeable  for  better, 
as  when  unduly  alloyed,  clipped  or  sweated, 


SECOND  EDITION. 


MONEY. 


Natural  Law  of  Money. 
International  Bimetallism 


With  Compliments  of 


PRESIDENT 
WELLS,  FARGO  &.  COMPANY, 


CALIFORNIA. 


HARD  1  IMES. 


BY 

JOHN  J.  VALENTINE. 


BHJ7ZRSIT7 


MONEY. 


Natural  Law  of  Money. 

International  Bimetallism 

4 'Free  Silver." 

Currency. 


THE  SILVER  QUESTION 


AND  — 


HARD  TIMES. 


BY 

JOHN  J.  VALENTINE. 


9IITIR-SXTT 


INDEX. 


PAGE. 

The  Natural  Law  of  Money 7 

International  Bimetallism 16 

"Free  Silver". 62 

Currency 9° 

The  Silver  Question  and  Hard  Times 121 


PRESS  OF 

H.  S.  CROCKER  COMPANY 
SAN  FRANCISCO 


PREFACE. 


THE  four  leading  papers  herein  were  incited  by  an 
admirable  essay  on  the  Bond  Syndicate  of  1895,  rea<^ 
before  the  Berkeley  Club  of  Oakland,  at  one  of  their 
stated  meetings  last  winter,  by  Mr.  Nye,  of  the  Oakland 
Enquirer.  The  members  of  the  Club,  to  whom  I  re- 
spectfully dedicate  this  little  series  of  discourses,  were 
so  courteous  as  to  voluntarily  accord  me  an  unusual 
allowance  of  time  to  speak  upon  the  same  subject;  and, 
my  remarks  having  led  to  a  number  of  questions 
upon  that  and  kindred  matters,  I  at  once  decided  to 
forego  the  preparation  of  a  paper  on  Franz  Deak,  the 
Hungarian  statesman,  which  I  had  in  contemplation 
to  serve  at  my  turn  to  read  before  the  Club,  and  sub- 
stitute one  upon  the  subject  of  money.  My  studies 
on  this  theme  expanded  into  four  separate  papers, 
namely,  The  Natural  Law  of  Money,  International 
Bimetallism,  Free  Silver,  and  Currency,  and  they 
were  listened  to  with  such  interest  that  I  have  been 
asked  to  publish  them, — the  honored  President  of  the 
University  of  California,  Prof.  Martin  Kellogg,  having 
himself  suggested  that  it  was  my  duty  to  do  so. 

In  yielding  to  these  requests  I   would  have  it  fully 
understood    that   I   offer  nothing  novel   or  theoretical, 


for  there  is  nothing  new  under  the  sun  in  regard  to 
money,  any  more  than  there  is  in  regard  to  other 
things,  and  here,  as  elsewhere,  we  have  the  lessons  of 
experience  to  draw  upon.  I  have,  therefore,  utilized 
in  my  remarks  the  expressions  of  well-known  writers, 
past  and  present, — John  Locke,  Adam  Smith,  Lord 
Liverpool,  Alexander  Hamilton,  Thomas  Jefferson, 
Albert  Gallatin,  Daniel  Webster,  Wm.  Jacob,  Jno.  Stuart 
Mill,  Walter  Bagehot,  Henry  D.  MacLeod,  Robert  Giffen, 
Prof.  W.  A.  Shaw,  Prof.  Alfred  Marshall,  Benjamin 
Kidd,  Prof.  Nicholson,  Elijah  Helm,  William  Brough, 
Mr.  Schoenhof,  Horace  White,  Andrew  D.  White  ot 
Cornell,  Prof.  Francis  A.  Walker,  Prof.  Taussig,  Prof. 
Farnham,  Prof.  Perry,  Prof.  Hadley,  Prof,  Laughlin, 
Prof.  Moses,  David  A.  Wells,  C.  F.  Adams,  Edward 
Atkinson,  R.  Q.  Mills,  O.  H.  P.  Belmont,  and  others  too 
numerous  to  mention,  not  omitting,  however,  my  per- 
sonal friend  Louis  A.  Garnett,  of  this  city,  whom  I 
deem  as  well  informed  a  man  upon  the  subject  as  I 
have  ever  come  in  contact  with.  I  may  add  that,  of 
the  French  economists,  Baisse,  Levasseur,  Chevalier, 
Parieu,  Permez,  D'Avenal,  the  two  Says,  Leon  and  J.  B., 
Tirard,  Beaulieu,  des  Essars,  and  more,  there  is  not 
a  single  one  that  was  not,  or  is  not,  a  supporter  of 
the  gold  standard. 

It  is  not  for  the  purpose  of  making  a  pretence  to 
learning  that  I  mention  this  formidable  array  of  names, 
but  in  order  to  give  credit  to  these  writers  from  whom, 
as  a  constantly  occupied  business  man,  I  have  drawn, 


5 

often  bodily.  I  think  I  may  claim  that  few  men  have 
been  more  steadily  engaged  than  I  dnring  my  forty- 
two  years  of  business  activity,  but  having  always 
indulged  a  taste  for  reading,  and  been  accustomed  to 
mark  and  note  any  item  of  statistical  importance,  or 
argument  which  I  particularly  concurred  in  or  dis- 
sented from,  it  was  not  difficult  for  me  to  collect  the 
facts  cited  herein  and  draw  my  own  conclusions  from 
them. 

The  subject  in  all  its  bearings  is  one  to  which  I  have 
given  some  attention  for  more  than  thirty  years,  con- 
siderable of  it  since  the  discussion  began  in  the  seven- 
ties which  ended  in  the  passage  of  the  Bland-Allison 
Act, — and  which,  in  intervals  of  leisure  since  the 
passage  of  the  so-called  Sherman  Act  of  July  I4th, 
1890,  I  have  investigated  with  persistent,  studious  care. 
I  came  to  its  consideration  with  every  possible  motive 
for  advocating  the  so-called  cause  of  silver,  but  what- 
ever may  be  thought  of  the  influence  of  money  on  prices, 
or  the  feasibility  of  international  bimetallism,  however 
debatable  that  theory  may  be,  or  other  monetary  pro- 
jects, it  is  an  assured  fact  that  the  records  of  history 
and  of  economic  science  absolutely  preclude  the  possi- 
bility of  the  concurrent  circulation  of  gold  and  silver 
as  legal  tender  under  the  independent,  unlimited  free 
coinage  of  both  metals  at  a  ratio  of  sixteen  parts  of 
silver  to  one  part  of  gold,  or  at  any  ratio  appreciably 
different  from  the  commercial  value  of  the  metals, — and 
that  under  unlimited  free  coinage  of  silver  by  the 


United  States  alone  the  purchasing  power  of  each  coin 
would  be  confined  to  its  bullion  value,  whatever  that 

might  be,  from  time  to  time. 

A  LAYMAN. 

SAN  FRANCISCO,  CAI,., 

August  18,  1896. 


PREFACE  TO  SECOND  EDITION. 


The  first  edition  of  this  little  book  having  been 
exhausted,  a  second  is  asked  for,  and  in  presenting  it 
to  an  enlarged  circle  of  readers  it  seems  proper,  in 
deference  to  such  able  and  rational  writers  as  Prof. 
J.  S.  Nicholson  of  Edinburgh,  Mr.  Elijah  Helm  of 
Manchester,  and  Prof.  Francis  A.  Walker  of  Boston, 
to  explain  that  the  bimetallism,  joint  metallism  or 
symmetallism  advocated  by  them,  or  by  Prof.  Alfred 
Marshall,  or  such  eminent  Englishmen  as,  for  example, 
Sir  Samuel  Montagu,  are  wholly  different  propositions 
from  that  now  advanced  by  the  Populistic  free  silver 
propagandists  in  the  United  States  of  America.  See 
concluding  article  herein. 

On  page  88  of  the  first  edition,  in  first  line  on 
standard  of  value,  the  word  u  quality  "  was  erroneously 

printed  for  quantity. 

JOHN  J.  VALENTINE. 

SAN  FRANCISCO,  CAI,., 

September  5,  1896. 


SIIYBBSITT 


THE  NATURAL  LAW  OF  MONEY. 

late  Walter  Bagehot  remarked  that  the  United 
1  States  was  a  country  for  exemplifying  by  experi- 
ments on  a  large  scale  the  old  truths  of  political 
economy.  The  people  were  indifferent  to  experience 
gained  elsewhere,  while  they  were  protected  by  their 
magnificent  resources  from  the  most  serious  conse- 
quences of  mistakes  in  their  own  practices  that  in  old 
countries  would  be  supremely  disastrous.  They  were 
thus  constantly  renewing  old  experiments  under  favor- 
able conditions,  and  confirming,  if  not  enlarging,  the 
knowledge  of  the  principles  of  political  economy.  The 
latest  experiment  of  this  kind  is  the  silver  legislation 
of  which  we  have  all  heard  so  much. 

It  is  not  my  design  or  expectation  to  present  any- 
thing new  or  original  in  the  consideration  of  this  ques- 
tion, but  simply  some  of  the  laws  and  established  facts 
that  govern  it ;  and,  in  doing  this,  I  have  frequently 
utilized,  without  giving  credit,  the  exact  phraseology  of 
the  best  writers  upon  the  subject. 

Of  all  things  in  the  world,  money,  which  can  least 
bear  tampering  with  or  anything  but  scientific  treat- 
ment, is  being  made  in  this  country  the  bone  of  noisy 
contention,  instigated  partly  by  the  influence  of  mining 
interests  which  ardently  desire  to  raise  the  price  of 
silver,  and  the  adherents  of  a  soft-money  heresy  who 
hope  to  create  abundant  money  out  of  metal  of  some 
kind  if  they  cannot  have  inconvertible  paper. 


8 

The  natural  law  of  money  is,  in  general,  the  law  of 
civilization,  viz,  evolution:  beginning,  it  may  be,  with 
the  barter  of  a  horse  for  a  cow,  a  sheep  for  a  hog,  a  goat 
for  a  dog ;  after  that,  the  use  of  pebbles  or  shells  as  the 
representatives  of  value  in  the  exchange  of  different 
commodities  ;  next  iron  ;  then  copper,  bronze  or  brass  ; 
then  silver  ;  and  finally  gold,  and  obligations  expressed 
on  paper, — showing  throughout  a  law  of  displacement, 
the  inferior  by  the  superior,  or  the  survival  of  the 
fittest — gold — as  the  standard  money — money  of  ulti- 
mate redemption,  that  metal  having  demonstrated  to 
the  world  of  commerce  its  superior  utility,  efficiency 
and  refinement  as  the  best  basis  and  medium  for  the 
interchange  of  commodities,  as  well  as  for  discharging 
the  terms  of  time  obligations. 

Aristotle,  on  the  origin  and  definition  of  money, 
says  : 

"  It  is  plain  that  in  the  first  society  (that  is,  in  the 
household)  there  was  no  such  thing  as  barter,  but  that 
it  took  place  when  the  community  became  enlarged  ; 
for  the  former  had  all  things  in  common,  while  the 
latter,  being  separated,  must  exchange  with  each  other 
according  to  their  needs,  just  as  many  barbarous  tribes 
now  subsist  by  barter,  for  these  merely  exchange  one 
useful  thing  for  another,  as,  for  example,  giving  and 
receiving  winelfor  grain,  and  other  things  in  like  man- 
ner. From  this  it  came  about  logically  that  as  the 
machinery  for  bringing  in  what  was  wanted,  and  of 
sending  out  a  surplus,  was  inconvenient,  the  use  of 
money  was  devised  as  a  matter  of  necessity.  For  not 
all  the  necessaries  of  life  are  easy  of  carriage ;  where- 
fore, to  effect  their  exchanges,  men  contrived  something 
to  give  and  take  among  themselves  that  which,  being 


valuable  in  itself,  had  the  advantage  of  being  easily 
passed  from  hand  to  hand  for  the  needs  of  life,  such  as 
iron  or  silver,  or  something  else  of  that  kind,  of  which 
they  first  determined  merely  the  size  and  weight,  but 
eventually  put  a  stamp  on  it  in  order  to  save  the  trouble 
of  weighing,  and  this  stamp  became  the  sign  of  its  value" 
Aristotle^  s  Politics,  1-9. 

It  should  be  borne  in  mind,  however,  that  all  trade  is 
barter,  even  when  the  precious  metals  are  employed  as 
intermediaries,  the  latter  being  articles  of  barter  also, 
possessing  intrinsically  the  same  value  as  the  things  for 
which  they  are  exchanged.  The  whole  science  of  money 
hinges  on  this  fact. 

One  commodity  employed  as  money  does  not  go  out 
of  use  until  it  is  superseded  by  another  of  superior 
qualifications  for  the  service.  This  is  the  natural  law 
that  governs  the  change  from  one  kind  of  money  to 
another. 

To  give  to  coin  all  the  elements  of  efficiency  that  it 
can  possess,  it  is  really  only  necessary  to  start  it  into 
circulation  with  its  full  weight  and  fineness  of  precious 
metal,  that  is,  intrinsic  equivalency,  and  its  mintage  or 
assay  stamp,  and  let  it  go  where  it  will.  For  examples, 
the  Schlick  Thaler  of  Bohemia;  the  Spanish  milled 
dollar ;  Bechtler's  gold  coinage  of  the  Carolinas  ;  the 
ingot  of  Moffatt  &  Company,  and  coins  of  Kellogg, 
Hewston  &  Company,  of  San  Francisco;  the  Utah  and 
Colorado  gold  coinages,  and  others.  It  is  an  advantage 
of  a  good  standard,  as  gold  or  silver,  that  it  may  be 
used  as  a  common  measure  of  value,  without  altering 
very  much  the  supply  and  demand  of  the  article  itself, 


10 

so  that  the  exchange  value  of  the  article  may  be 
wholly  left  to  natural  conditions.  Here  we  have  the 
natural  law  of  metallic  money  in  all  its  simplicity.  The 
complexities  are  of  our  own  making. 

Debased  money  has  entered  into  the  experience  of 
every  civilized  nation  at  some  period  of  its  history,  and 
it  is  not  necessary  to  particularize,  but  there  are  inter- 
esting chapters  in  Jacobs,  showing  conditions  under 
Henry  VIII.  and  Edward  VI.,  and  Macaulay,  of  a  later 
date  also,  describing  the  imposition  of  brass  money  on 
Ireland,  etc. 

What  I  have  designated  as  the  natural  law  of  money 
is  inverted  by  the  interjection  of  the  legal-tender  qual- 
ity into  money  of  unlimited  issue ;  and  what  is  com- 
monly known  as  the  Gresham  Law  demonstrates 
itself  with  certainty.  Simply  stated,  this  law  is  the 
operation  of  brokerage,  assorting,  culling,  garbling, 
etc., — thus  always  forcing  the  poorest  money  into  cir- 
culation. And  this  all  proceeds  from  the  delusion  on 
the  part  of  men  that,  in  some  mystic  or  supernatural 
manner,  governments  can  permanently  regulate  the 
value  of  money  by  conferring  upon  it  a  legal-tender 
quality.  If  by  legislative  enactment  Government 
could  exert  that  power,  similar  legislation  would  enable 
it  to  regulate  the  value  of  all  commodities. 

About  1366  Charles  V.,  King  of  France,  sometimes 
styled  Charles  the  Wise,  observing  that  the  coins  of  the 
realm  were  in  dire  confusion,  empowered  one  of  his 
ministers,  Nicholas  Oresme,  a  man  of  distinguished 
attainments,  a  member  of  the  French  Imperial  Govern- 
ment, and  subsequently  President  of  the  College  of 


II 

Navarre,  to  investigate  and  apply  a  remedy.  As  a 
result,  Oresme  published  a  treatise  entitled,  u  A  Theory 
of  Money,"  and  in  this  he  outlined  what  is  now  called 
the  Gresham  Law.  In  1526  Sigisrnund  I.  of  Poland, 
to  which  Prussia  then  belonged,  observing  that  the 
coins  and  money  of  his  realm  were  in  a  deplorable  con- 
dition of  debasement,  which  was  and  had  been  the 
chronic  condition  of  all  Europe,  selected  Nicholas 
Copernicus,  the  great  astronomer,  to  consider  the  sub- 
ject ;  and  Copernicus,  after  investigation,  wrote  a  treatise 
setting  forth  doctrines  that  had  been  formulated  one 
hundred  and  sixty  years  before  by  Oresme  for  the 
King  of  France,  though  there  is  no  evidence  to  indicate 
that  he  knew  the  conclusions  arrived  at  by  Oresme. 
The  doctrines  of  Oresme  and  Copernicus  are  sub- 
stantially identical : 

1.  That  it  is  impossible  for  the  law  to  regulate  the 
value  of  the  coins,  i.  e.,  the  purchasing  power. 

2.  That  all  the  law  can  do  is  to  maintain  the  coinage 
at  a  fixed  denomination,  weight  and  purity. 

3.  That   it   is  robbery  for  the  law  to   change  the 
denomination,  diminish  the  weight,  or  debase  the  purity 
of  the  coinage. 

4.  That  it  is  impossible  for  good,  full-weighted  coin 
and  debased  coin  to  circulate  together. 

5.  That  the  coins  of  gold  and  silver  must  bear  the 
same  ratio  to  each  other  as  the  metals  in  bullion  do  in 
the  market. 

In  1558  Queen  Elizabeth,  discovering  in  her  realm 
the  same  unfortunate  conditions  connected  with  the 
coins  that  had  existed  in  France  two  hundred  years 


12 

before,  and  in  Poland  the  previous  generation, — espec- 
ially produced  in  England  by  the  repeated  debasements 
that  occurred  under  Henry  VIII.  and  Edward  VI., — 
selected  Sir  Thomas  Gresham,  one  of  the  most  eminent 
men  of  the  day,  who,  amongst  other  claims  to  distinc- 
tion, possesses  that  of  having  founded  the  Royal 
Exchange  of  London  ;  and  he,  after  a  careful  examina- 
tion of  the  matter,  reached  the  same  conclusions  that 
had  in  turn  been  reached  by  Oresme  and  Copernicus, 
known  now  as  the  Gresham  Law,  and  which,  as  formu- 
lated to-day  and  accepted  by  economists  and  financiers 
the  world  over,  is  briefly  expressed  in  the  following 
terms : 

When  two  coins  of  the  same  denomination,  but 
differing  in  commercial  value,  are  current  in  the  same 
nation,  that  which  has  the  least  value  will  be  kept  in 
circulation  and  the  other  withdrawn  from  it  as  much  as 
possible,  and  hoarded,  melted  down,  or  exported, — in 
short,  that  bad  money  drives  out  good. 

It  may  be  fairly  stated  that  this  fundamental  law  of 
money  is  found  to  hold  universally  true  in  all  ages  and 
countries,  and  has  been  recognized  and  acknowledged 
by  learned  men  in  all  discussions  on  the  subject.  It 
applies  in  the  following  cases  : 

i.  If  the  coinage  consists  of  only  a  single  metal,  as 
in  the  early  coinage  of  England,  and  clipped,  degraded, 
and  debased  coins  be  allowed  to  pass  current  with  good 
coin,  all  the  good  coin  will  disappear  from  circulation. 
It  is  either  hoarded,  melted  down,  or  exported.  All 
laws  are  ineffectual  to  prevent  this;  the  clipped,  de- 
graded, and  debased  coin  will  alone  remain  current. 


ft*M 
IIITSRSIT 

13 


2.  If  coins  of  two  kinds  of  metal,  such  as  gold  and 
silver,  are  allowed  to  pass  current  together  in  unlimited 
quantities,  and  if  a  legal  ratio  is  attempted  to  be  en- 
forced between  them  which  differs  from  their  relative 
value  in   the  markets  of  the  world^   the  coin  which  is 
underrated   disappears   from    circulation  :    it   is   either 
hoarded,  melted  down,  or  exported,  and  that  which  is 
overrated  alone  remains  current.     The  law  holds  good 
also  in  relation  to  bank-note  circulation. 

3.  This  law  is  not  confined  to  single  and  separate 
countries  ;  it  is  not  limited  in  time  or  space  ;  it  is  abso- 
lutely universal.     The  Oresme,   Copernicus,  Gresham 
Law    was    expounded    to    the   government   of    Great 
Britain  by  Locke,  Newton,  and  other  eminent  men   of 
the   times  ;  but   a  knowledge  of  its  workings  did  not 
reveal  to  them  a  remedy  for  continually  existing  and 
recurring   evils    of   coinage,    viz,    the    variations,    the 
partings  of  the  metals,  the  breakdown  of  parity  of  coin 
in  circulation,  etc.,  which  were  universal.     A  solution 
was  found  by  Sir  William  Petty,  who  died  in  1687,  in 
a  treatise  of  his  discovered  in  1691,  viz,  to  make  one 
metal  the  standard  money,  and  the  other  subsidiary  to 
it  ;  that  so  much  subsidiary  coin  as  could  be  kept  in  free 
circulation,  redeemable  in   or  exchangeable   with    the 
standard  metal  coins,  was  not  only  the  best  but   the 
only  method  practicable  for  using  both.     That  there 
could,  of  course,  be  no  such  thing  as  a  double  standard, 
and  the  greatest  stability  of  money  was  to  be  attained 
by  using    one    metal    as   standard.     This   theory  was 
elaborated  at  a  later  date  by  Adam  Smith. 


14 

It  was  the  unbroken  experience  of  centuries  when 
Locke  took  up  the  question  in  England,  as  it  has  been  the 
experience  ever  since,  that  immediately  side  by  side  with 
the  legal  ratio  there  is  a  market  ratio,  and  there  is  no 
discernible  tendency  for  the  former  to  govern  the  latter. 

The  laws  that  finally  govern  finance  are  not  made  in 
conventions  or  congresses.  The  foundation  of  the  inter- 
national bimetallic  theory — a  purely  empirical  proposi- 
tion— is  thus  erroneous  from  the  beginning. 

It  is  not  claimed  by  any  prominent  advocates  of 
bimetallism,  for  example  Lavelleye  of  Belgium,  Cer- 
nuschi  of  France,  Ahrendt  of  Germany,  Seyd  (deceased) , 
Gibbs  and  Helm  of  England,  or  Andrews  or  Walker 
of  the  United  States,  that  the  unrestricted  free  coinage 
of  silver  by  any  one  government  now  maintaining  a 
gold  standard  could  be  otherwise  than  disastrous.  On 
the  contrary,  they  declare  in  print  that  it  would  be 
calamitous,  and  that  they  do  not  desire  to  debase  the 
standard  of  value :  they  would  have  every  debt  paid  in 
gold  or  its  equivalent.  And  this  is  the  attitude  of  bi- 
metallists  generally  in  Great  Britain  and  Continental 
Europe.  To  all  of  which  I  remark  :  When  the  two 
metals  have  unlimited  free  coinage  at  fixed  ratios  and 
are  legal  tender,  the  cheaper  will,  under  all  possible 
circumstances,  drive  the  dearer  out  of  circulation. 

Says  Mr.  Elijah  Helm,  one  of  the  ablest  bimetallists 
of  England : 

"  The  scheme  put  forward  by  bimetallists  for  the 
resuscitation  of  the  joint  standard  by  an  international 
agreement  is  a  new  thing  to  the  world.  Nothing 
exactly  like  it  has  ever  yet  existed." 


Says  Prof.  W.  A.  Shaw  : 

u  The  modern  theory  of  bimetallism  is  almost  the 
only  instance  in  history  of  a  theory  growing,  not  out 
of  practice,  but  of  the  failure  of  practice,  resting  not 
on  data  verified,  ^but  on  data  falsified  and  censure- 
marked.  No  words  can  be  too  strong  of  condemnation 
for  the  theorizing  of  the  bimetallist  who,  by  sheer 
imaginings,  tries  to  j ustify  theoretically  what  has  failed 
in  five  centuries  of  history,  and  to  expound  theoretically 
what  has  proved  itself  incapable  of  solution  save  by 
cutting  and  casting  away." 


INTERNATIONAL   BIMETALLISM. 

MBEERNAERT,  the    Minister   of   Finance    of 
•   Belgium,    opened    the    Brussels    International 
Bimetallic   Conference    or    Convention    of    December, 
1892,  as  follows  : 

"  The  Conference  in  which  you  are  called  upon  to 
take  part  has  for  its  object  the  consideration  of  one  of 
the  most  serious,  complex  and  arduous  problems  pre- 
sented to  modern  society.  The  subject  of  money 
touches  all  economic  and  social  interests ;  it  affects 
the  commerce  of  the  world,  and  is  the  real  reason  of 
more  than  one  unexplained  crisis,"  etc.,  etc. 

There  were  proposals  as  early  as  the  seventeenth 
century  for  a  universal  common  ratio  for  the  money 
metals,  but  there  is  no  trace,  in  the  writings  of  Amer- 
ican statesmen,  of  the  peculiar  monetary  theory  on 
which  bimetallism  is  now  based.  Probably  there  is  no 
later  exposition  of  the  theory  of  international  bimetal- 
lism than  that  contained  in  Prof.  Nicholson's  "  Money 
and  Monetary  Problems,"  Mr.  Elijah  Helm's  "  Joint 
Standard,"  Archbishop  Walsh's  pamphlet  of  1892,  and 
Prof.  E.  B.  Andrews'  essays,  published  in  book  form 
in  1894,  under  the  title  of  u  An  Honest  Dollar,"  which, 
condensed,  is  Jevon's  illustration  of  Wolloski's  doctrine 
of  two  balancing  hoards,  based  upon  what  is  known  as 
the  quantitative  theory  of  money,  which  proceeds  on 
the  assumption  that  there  is  a  pool  of  money  into 
which  a  balance  of  the  precious  metals  falls  after  other 
uses  have  been  satisfied,  and  that  prices  rise  or  fall 


proportionately  with  an  increase  or  diminution  of  the 
pool,  otherwise  stated  thus  : 

"Imagine  two  reservoirs  of  water,  each  subject  to 
independent  variations  of  supply  and  demand.  In  the 
absence  of  any  connecting  pipe,  the  level  of  the  water 
in  each  reservoir  will  be  subject  to  its  own  fluctuations 
only.  But,  if  we  open  a  connection,  the  water  in  both 
will  assume  a  certain  mean  level,  and  the  effects  of  any 
excessive  supply  or  demand  will  be  distributed  over  the 
whole  area  of  both  reservoirs,  which  enables  one  metal 
to  take  the  place  of  the  other  as  an  unlimited  legal 
tender." 

This  theory  being  based  on  the  conception  of  govern- 
mental power :  first,  by  Archbishop  Walsh,  that,  "while 
legislation  cannot  directly  give  value  to  a  thing,  it  can 
do  so  indirectly, — it  can  set  up  a  demand  which  is  one 
of  the  factors  of  value;"  second,  by  Professor  Andrews, 
that,  "  while  law  cannot  control  value  independently  of 
supply  and  demand,  it  can  set  free  an  economic  force 
which  will  largely  control  supply  and  demand  them- 
selves." 

u  The  bimetallist  affirms:  (i),  that  the  monetary 
demand  and  supply  of  gold  and  silver,  supposing  both 
freely  coined,  in  fixing  the  purchasing  power  of  given 
quantities  of  them,  overwhelmingly  out-influence  the 
commodity  demand  and  supply;  (2),  that  law  can,  at 
least,  establish  a  legal-tender  and  debt-paying  parity 
between  a  given  quantity  of  gold  and  a  given  quantity 
of  silver,  which  parity  treaty  could  extend  throughout 
any  number  of  States ;  (3),  that,  since  men  are  wont  to 
discharge  their  pecuniary  obligations  as  easily  as  they 
can,  the  existence  of  such  legal-tender  and  debt-paying 
parity  would,  in  case  this  legal  parity  should  ever  for  any 
reason  fail  to  match  the  commercial  parity,  stimulate 


i8 

the  demand  for  the  cheaper  metal,  appreciate  it,  and 
so  tend  to  identify  the  parities  again;  (4),  that  if  the 
field  of  legal  parity  is  large,  embracing  in  its  bimetallic 
basin  a  third  or  even  a  quarter  of  the  world's  gold  and 
silver,  unless  the  value-ratio  between  the  two  metals 
denoted  by  the  legal  parity  is  widely  at  variance  with 
the  ratio  in  quantity  between  the  total  stocks  of  the 
two,  the  aforesaid  stimulus  of  demand  for  the  cheaper 
will  overbear  every  tendency  to  part  the  parities  named, 
and  maintain  the  unit  quantity  of  gold  and  the  unit 
quantity  of  silver  perpetually  at  the  same  value. n 

This  reasoning  seems  to  minimize  the  importance  of 
the  commercial  demand  for  the  precious  metals  for  use 
in  the  arts  and  as  a  commodity  in  international  com- 
merce. 

POSTULATE  i. 

"  The  bimetallist  affirms  that  the  monetary  demand 
and  supply  of  gold  and  silver,  supposing  both  freely 
coined,  in  fixing  the  purchasing  power  of  given  quan- 
tities of  them,  overwhelmingly  out-influence  the  com- 
modity demand  and  supply." 

The  monetary  demand  is  the  demand  upon  the 
entire  money  mass,  including  not  only  money  in  all  its 
various  forms,  but  all  the  other  signs  of  value  and 
instrumentalities  employed  in  effecting  exchanges  of 
which  gold  and  silver  constitute  but  a  very  small  por- 
tion. The  energy  or  pressure  of  this  demand  will  be 
indicated  only  by  the  rates  of  interest,  but  will  not  in 
the  slightest  degree  affect  the  purchasing  power  of 
money,  or  the  commodity  value  of  the  material  of  which 
money  is  made. 

From  the  days  of  Aristotle  to  the  present  time,  it  has 
been  contended  that  coinage  adds  nothing  to  the  value 


of  the  precious  metals,  but  simply  serves  as  a  means 
of  authentication  by  inspection  only,  and  as  a  guar- 
antee of  the  weight  and  fineness  of  the  coin,  and  saves 
the  trouble  of  weighing  and  assaying.  It  has  simply 
the  effect  that  the  stamp  of  "  Goldsmith's  Hall"  has  upon 
spoons  or  plate,  and  adds  no  more  to  the  value  of  the 
material  of  which  metallic  money  is  made  than  printing 
bank  notes  or  bonds  produces  upon  the  market  value 
of  bank-note  paper  or  parchment. 

The  fundamental  error  of  this  postulate,  which  goes 
to  the  very  foundation  of  bimetallism,  is  that  the  coin- 
age of  gold  and  silver  operates  as  a  demand  upon 
the  metal  mass,  and,  therefore,  brings  them,  as  com- 
modities, within  the  general  economic  law  of  supply 
and  demand.  But  this  is  a  fatal  error.  The  law  of 
supply  and  demand,  as  applied  to  perishable  commodi- 
ties, is  founded  upon  the  theory  that  demand  is  the 
index  of  consumption,  and  that  consumption,  by  the 
destruction  or  actual  consuming  of  the  material,  creates 
a  constant  necessity  for  new  supplies  to  satisfy  new 
demands.  But  the  precious  metals,  being  practically 
imperishable  and  indestructible,  are  in  no  wise  affected 
by  mere  coinage ;  but,  upon  the  contrary,  their  condition 
is  thereby  greatly  improved  for  employment  in  either 
the  arts  or  international  commerce,  in  which  they  are 
treated  simply  as  commodities.  Coinage,  therefore, 
does  not,  in  an  economic  sense,  operate  as  consump- 
tion, but,  upon  the  contrary,  as  a  continual  hoarding 
and  stocking  of  the  metal,  the  direct  tendency  of  which 
is  to  depress  its  value  as  a  commodity,  by  which  alone 
its  purchasing  power  as  money  is  governed,  and 


20 

which  will  always  be  indicated  by  the  true  par  of 
exchange,  just  as  the  demand  for  money  will  be  indi- 
cated by  the  rates  of  interest.  The  facts,  therefore,  are 
just  the  reverse  of  those  stated.  Coinage  exerts  no 
influence  whatever  in  fixing  the  purchasing  power  of 
the  metals,  which  is  governed  entirely  by  the  com- 
modity demand  and  supply  operating  through  the  rates 
of  international  exchanges,  which  fix  the  commercial 

values. 

POSTULATE  2. 

No  one  will  deny  this  proposition.  But,  unless  the 
legal  parity  established  conforms  to  the  commercial  par- 
ity, it  can  only  be  maintained  under  exclusive  coinage 
for  account  of  the  Government,  and  not  under  free  coin- 
age. And  even  then  it  can  only  be  maintained  locally 
as  a  circulating  medium,  but  not  internationally  as  a 
medium  of  foreign  exchange,  which  will  always  be  based 
on  the  commercial  parity. 

POSTULATES  3  AND  4. 

These  practically  rest  on  the  same  basis  and  involve 
the  same  error  pointed  out  in  No.  i,  in  assuming  that 
"  free  coinage "  is  a  demand  upon  the  metal  mass, 
whereas  it  is  evidence  of  an  absence  of  demand,  as  gold 
and  silver  go  to  the  mint  only  because  they  will  com- 
mand no  better  price  in  the  open  market. 

When  the  commercial  and  legal  parities  differ,  how- 
ever, while  the  difference  may  stimulate  the  demand  for 
the  cheaper  metal  for  the  purpose  of  coinage  with  a 
view  of  cheating  creditors,  it  will  produce  no  effect 
whatever  in  restoring  the  parity  or  equilibrium,  for  the 
reason  given  under  Postulate  No.  i. 


21 

The  only  experiment  which  history  affords  us  of  a 
practical  test  of  this  theory  is  the  memorable  one  made 
by  France  from  1853  to  1859,  the  practical  result  of 
which  was  the  very  reverse  of  what  is  here  claimed. 
Prior  to  1853  the  average  price  of  silver  for  30  years 
showed  that  at  15^  to  i  that  metal  was  overvalued 
about  i^  per  cent,  and  France  during  that  period  had 
practically  only  a  single  standard  of  silver.  But,  in 
consequence  of  the  great  demand  for  that  metal  in 
London  for  Oriental  account,  its  commercial  parity 
rose  above  i5/^>  and  an  immense  drain  of  silver  from 
the  Bank  of  France  set  in.  To  check  this  and  restore 
the  equilibrium,  the  bank  went  into  the  London  mar- 
ket and  paid  $3,000,000  in  premiums  for  gold  in  less 
than  three  years,  which  exceeded  the  disparity  between 
the  metals.  For  five  years  her  coinage  of  gold  averaged 
$90,000,000  per  annum,  or  80  per  cent  of  the  world's 
product,  and  yet  gold  declined  over  i  per  cent  in  value 
under  this  enormous  coinage.  But,  to  cap  the  climax, 
in  1859  she  broke  the  world's  record  by  coining 
$130,000,000  of  gold,  or  $10,000,000  in  excess  of  the 
entire  product  of  the  world,  and  yet  the  only  effect  was 
that  gold  fell  i  per  cent  lower.  Or,  in  other  words, 
silver  had  advanced  over  2  per  cent  under  this 
enormous  coinage  of  the  cheaper  metal,  the  con- 
trolling factor  being  the  rate  of  Oriental  exchange  on 
the  London  market,  thus  showing  conclusively  that 
coinage  is  -  utterly  powerless,  when  brought  in  con- 
tact with  the  inexorable  laws  of  commerce,  to  affect 
or  change  the  parity  between  the  metals ;  and  this 
whole  theory — the  quantitative  theory — is  without  the 


22 

slightest  foundation  in  any  known  principle  of  economic 
law,  and  is  a  fallacy. 

Again,  I  quote  from  Professor  Andrews : 
"  Writers  and  thinkers  of  the  highest  ability  believe 
that  all  necessary  or  attainable  fixity  of  general  prices 
is  to  come  from  international  bimetallism.  There  can 
indeed  be  no  doubt  that  this  scheme  would,  for  a  long 
time,  render  extraordinary  service,  if  it  could  only  be 
carried  into  effect.^ 

So  much  for  the  bimetallist  view.  To  restate  the 
answer  already  given :  Supposing  that  gold  and  silver 
are  coined  in  unlimited  quantities,  and  a  fixed  legal 
ratio  is  enacted  between  them. 

1.  Is  it  the  fixed  legal  ratio  enacted  between  the 
coins  which  governs  the  relative  value  of  the  metals  in 
bullion  ? 

2.  Or,   is   it   the   relative   value  of  the    metals  in 
bullion  which  governs  the  relative  value  of  the  coins  ? 

3.  And   if  it  be  found   impossible   for  any  single 
country  to  maintain  gold  and  silver  coined  in  unlimited 
quantities  in  circulation  together  at  a  fixed  legal  ratio, 
is  it  possible  for  any  number  of  countries  combined  to 
do  so  by  an  international  agreement  ? 

It  is  not  only  my  purpose  to  combat  the  theory  of 
international  bimetallism, — that  has  been  so  ably  done 
by  scores  of  writers,  notably  of  late  by  Giffen,  MacLeod, 
Brough,  Shaw,  Laughlin,  Wells,  Leon  Say,  Beaulieu, 
Schoenhof  and  others, — but  also  to  mention  some  of 
the  fallacious  reasons,  inferences  or  conclusions  ad- 
vanced by  its  advocates,  and  to  present  their  refutation. 
Here  are  specimens  culled  from  Professor  Andrews' 


23 

utterances  setting  forth  the  evils  of  a  gold  standard,  as, 
for  example,  the  following  at  the  Brussels  Conference : 
"  They  (the  bimetaliists)  wish  to  stay  that  baneful, 
blighting,  deadly  fall  in  prices  which  for  nearly  thirty 
years  has  infected  with  miasma  the  economic  life  blood 
of  the  whole  world." 

And  the  following  from  his  "  An  Honest  Dollar :" 

"  The  rise  of  gold,  that  is,  the  fall  of  prices,  mainly 
consequent  upon  the  demonetization  of  silver  in  and 
after  1873,  has  had,  in  particular,  four  great  results, 
each  of  which  has  been  pernicious  in  the  extreme  : 

"  First,  it  has  tainted  with  injustice  every  time  con- 
tract made  anywhere  in  the  gold-using  world  since  1873. 

"  Second,  it  has,  all  over  this  vast  area,  afflicted 
productive  industry  with  anaemia,  asphyxia  and  paral- 
ysis, owing  to  which  the  world's  wealth  is  to-day  less 
by  billions  than  it  would  be  had  normal  monetary 
conditions  been  enjoyed. 

"  Third,  it  has  split  the  commercial  earth  in  two,  into 
a  gold-employing  and  a  silver-employing  hemisphere, 
between  which,  so  great  is  the  difficulty  of  exchange, 
commerce  has  ceased  to  be  a  rational  affair  and  has 
become  in  effect  a  game  of  hazard. 

"  And,  fourth,  by  thus  deranging  the  international 
exchange,  it  has  discouraged,  and,  upon  a  colossal 
scale,  lessened  in  amount  the  loaning  of  capital  by  rich 
countries  to  poor. 

"  I  maintain  it  has  been  an  absolute  and  unmitigated 
curse  to  human  civilization." 

However  much  a  scarcity  of  gold  may  possibly  have 
contributed  to  the  recent  fall  of  prices,  and,  through 
that,  to  the  depression  of  trade, — which  I  do  not 
admit, — it  does  not  necessarily  follow  that  the  effect 
will  be  continued,  nor  that  trade  will  be  permanently 
contracted.  A  less  number  of  gold  and  silver  pieces  at 


24 

low  prices  of  commodities  will  serve  for  the  same  ex- 
changes as  a  larger  number  at  higher  prices.  But  the 
fundamental  mistake  of  Prof.  Andrews  is  in  assuming 
that  metallic  money  alone  measures  values, — influences 
prices.  It  is,  if  at  all,  the  whole  money  fabric  built 
upon  metallic  money  that  does  so, — Credit  Money — bills 
of  exchange,  bank  notes,  cheques,  money  orders,  etc. — 
sustaining  98  per  cent  of  the  transactions  of  commerce. 
And,  so  long  as  these  instruments  are  settled  on  a  gold 
basis,  they  are  gold  measures  of  value.  For  example, 
let  us  take  foreign  commerce,  aggregating  say  sixteen 
thousand  millions  of  dollars  per  annum.  Less  than  2 
per  cent  of  gold  is  required  to  settle  the  balances  of  all 
this  vast  volume  of  trade,  and  therein  credit  represents 
confidence,  the  most  important  factor  of  all  in  the 
world's  commercial  relations.  The  New  York  Clearing- 
house balances  are  not  infrequently  more  in  a  week 
than  the  total  current  money  of  the  United  States. 

Says  Daniel  Webster:  "  Credit  has  done  more,  a 
thousand  times,  to  enrich  nations  than  all  the  mines  of 
all  the  world."  To  clear  up  the  confusion  of  bimetallist 
perception,  we  have  only  to  revert  to  the  sound  doctrine 
of  the  ancients, — that  exchangeability  is  the  sole  essence 
and  principle  of  wealth.  Witness  Demosthenes'  dic- 
tum :  "  If  you  were  ignorant  of  this,  that  credit  is  the 
greatest  capital  of  all  toward  the  acquisition  of  wealth, 
you  would  be  utterly  ignorant." 

A  point  that  the  silver  advocates  leave  out  of  consid- 
eration, but  which  will  assert  itself  in  monetary  matters, 
is  that  the  quantity  of  metallic  money  that  can  be  got 
into  circulation  in  any  one  country,  or,  for  that  matter, 
in  the  whole  world,  is  limited.  This  is  one  of  the 


25 

stumbling  blocks  to  the  bimetallists.  This  limitation 
arises  because  of  the  basic  function  of  money.  Metallic 
money  is  not  in  the  main  the  value  FOR  which  things  are 
exchanged,  but  the  value  BY  which  they  are  exchanged, 
ninety-eight  per  cent  of  the  transactions  of  the  world 
being  effected  by  the  signs  and  instrumentalities  of 
metallic  money. 

"  Metallic  money,  from  the  nature  of  its  inherent 
value,  unlike  other  forms  of  money  founded  upon  mere 
credit,  and  which  are  mere  signs,  is  an  intrinsic  equiva- 
lent, as  well  as  a  medium  of  exchange ;  and,  therefore, 
the  amount  of  such  money  which  any  nation  will 
possess,  or  can  retain  in  circulation,  will  bear  just  such 
a  relation  to  the  whole  volume  of  metallic  money  in 
circulation  among  commercial  nations  as  the  surplus  of 
its  disposable  products,  which  are  measured  by  it,  bears 
to  those  of  other  nations  with  whom  it  has  commercial 
intercourse,  and  will,  therefore,  be  precisely  the  same 
in  amount  whether  the  standard  by  which  its  exchange- 
able commodities  are  measured  consists  of  a  single 
metal  or  of  two  metals  at  a  fixed  ratio.  By  the 
operation  of  this  law  of  exchangeable  equivalents, 
the  precious  metals  will  always  distribute  themselves 
equitably  among  the  nations  of  the  earth  in  accordance 
with  their  respective  standards  of  value  and  relative 
balances  of  trade." 

It  is  not  true  that  the  quantity  of  money,  apart  from 
the  possibly  mischievous  consequences  of  any  sudden 
change,  socially  and  otherwise,  can  affect  materially  the 
real  wealth  and  welfare  of  an  industrial  community. 
As  John  Stuart  Mill  himself  saw  and  expressly  stated 
in  a  passage  which  is  uniformly  not  quoted  by  the  later 
adherents  of  the  quantity  theory  : 

'  The  proposition  respecting  the  dependence  of  gen- 


26 

eral  prices  upon  the  quantity  of  money  in  circulation 
must  for  the  present  be  understood  as  applying  only  to 
a  state  of  things  in  which  money,  that  is,  gold  or  silver, 
is  the  exclusive  instrument  of  exchange,  and  actually 
passes  from  hand  to  hand  at  every  purchase,  credit  in 
any  of  its  shapes  being  unknown.  When  credit  comes 
into  play  as  a  means  of  purchasing,  distinct  from  money 
in  hand,  the  connection  between  prices  and  the  amount 
of  the  circulating  medium  is  much  less  direct  and  inti- 
mate, and  such  connection  as  does  exist  no  longer 
admits  of  so  simple  a  mode  of  expression." 

Mr.  Giffen  says : 

"  There  is  a  relation  between  the  quantity  of  standard 
money  and  prices,  but  it  is  rather  one  in  which  prices 
assist  in  determining  the  quantity  of  the  precious  metals 
to  be  used  as  money,  and  not  one  in  which  prices  are 
themselves  determined  by  that  quantity.  There  are 
some  complicated  elements  in  the  problem  ;  but  this  is 
the  substantial  result.  Allowing  for  oscillations  and 
exceptions,  the  chronic  ratios  of  exchange  between  gold 
and  silver  and  other  commodities  are  not  determined  by 
any  special  qualities  these  metals  have  as  money.  It  is 
the  range  of  prices  as  part  of  a  general  economic  con- 
dition which  helps  to  determine  the  quantity  of  money 
in  use,  and  not  the  quantity  of  money  in  use  which 
determines  the  prices." 

One  word  more  of  the  international  bimetallist.  Not 
content  with  outdoing  Jeremiah  in  their  lamentations, 
some  of  them  enter  into  judgment  with  all  opposers. 
Said  Mr.  A.  J.  Balfour,  of  Manchester,  England,  three 
years  ago,  reiterated  by  Prof.  Andrews,  at  Golden  Gate 
Hall,  in  San  Francisco,  two  years  ago,  "  Any  man  who 
denies  the  entire  feasibility  of  international  bimetal- 
lism writes  himself  down  as  ignorant  of  the  latest 


27 

developments  of  economic  science."  This  is  simply 
sound  and  fury,  signifying  nothing.  He  might  just  as 
well  have  said,  "  Any  man  who  denies  the  entire  feasi- 
bility of  an  international  agreement  for  the  abolition 
of  war  writes  himself  down  as  ignorant  of  the  latest 
development  of  altruistic  feeling  in  the  human  race." 
The  first  is  not  more  likely  than  the  second,  and  to  see 
how  probable  the  latter  is  one  has  but  to  contemplate 
the  Armenian,  Transvaal  and  Venezuela  episodes. 

Mr.  Balfour  was  delivered  of  his  rhetorical  flight 
when  his  party  was  out  of  power.  When  returned  to 
power  his  utterances  indicated  that  the  English  poli- 
tician is  not  essentially  different  from  the  American. 
Approached  by  a  Irimetallist  as  to  the  probability  of 
action  by  the  Conservative  government  in  behalf  of 
bimetallism,  he  declared  that  his  expressions  of  opinion 
were  simply  his  own  and  not  binding  upon  any  mem- 
bers of  his  party.  When  pressed  to  say  whether  any 
government  action  would  be  taken  in  the  interest  of 
bimetallism,  he  frankly  declared  there  would  not ;  that 
he  deemed  it  injudicious. 

Archbishop  Walsh,  after  writing  a  comparatively 
plausible  argument  in  behalf  of  international  bimetal- 
lism, concludes  with  this  piece  of  fiatism :  "  New 
sovereigns  might  now  be  issued  containing  about  one- 
third  the  weight  of  gold  less  than  in  the  sovereign 
hitherto  issued.  Next  year,  in  case  of  increase  in 
the  value  of  gold  contained,  there  might  be  a  new 
issue  of  sovereigns  with  a  proportionately  smaller 
amount  of  gold,"  and  so  on  ad  infinitum.  And  Prof. 
Andrews'  doctrine  is,  in  the  last  analysis,  practically 
the  same,  viz  :  When  the  need  comes  to  change  the 


28 

ratio  do  it  by  lightening  the  gold  coins.  Dr.  Walsh's 
argument,  however,  is  simply  a  plea  for  Irish  tenant 
farmers,  and  comes  to  this  :  "  If  the  State  is  unable, 
or  unwilling,  to  apply  a  radical  remedy,  by  changing 
its  currency  system,  out  of  which  the  existing  evil — 
long-time  land  leases — has  grown,  it  surely  is  bound, 
at  the  very  least,  to  take  in  hand  the  readjustment  of 
the  terms  of  those  obligations  which,  through  the 
working  of  that  system,  have  grown  to  be  so  oppres- 
sively burdensome." 

Returning  again  to  Prof.  Andrews.  It  is,  of  course, 
possible,  theoretically,  that  with  international  bimetal- 
lism the  world's  productivity  since  1870  might  have 
been  greater  than  it  has  been, — just  as  John  Stuart 
Mill  raises  the  question  of  how  much  more  civilized 
the  world  might  be  now  if  Christianity  had  been 
adopted  by  the  Roman  government  under  Marcus 
Aurelius,  instead  of  one  hundred  and  fifty  years  later, 
under  Constantine  ; — but  it  was  not. 

Some  of  the  national  steps  for  adopting  gold  as  the 
standard  of  value,  so  far  as  expert  or  scientific  consid- 
eration is  concerned,  have  approximately  been  as 
follows :  Prior  to  the  year  1871,  the  countries  that  used 
the  gold  standard  were  Great  Britain  and  her  colonies, 
Portugal,  Turkey,  Brazil  and  the  Argentine  Republic, — 
Great  Britain  in  1816  (resumption  of  specie  payments 
1821), — though  gold,  because  of  its  efficiency,  had  by 
choice  been  the  money  of  commerce  for  a  century 
previously.  Of  twenty  powers  represented  at  the 
International  Monetary  Convention  at  Paris,  1867,  a^ 
(including  the  United  States)  favored  the  gold  standard 
except  Holland.  France's  movement  really  began  in 


29 

1853-5?)  w^en  sne  advantageously  exchanged  a  large 
volume  of  silver,  $300,000,000,  for  gold.  The  subject 
was  discussed  by  Bosredon,  Chevalier,  Levasseur  and 
other  French  economists,  Levasseur  declaring  that 
gold  had  made  itself  the  standard,  and  that  France 
should  make  the  law  conform  to  the  fact.  In  1868  and 
1869  two  committees  declared  the  superior  efficiency  of 
gold.  The  Imperial  Commission  of  France,  appointed 
in  1869,  says :  "  On  the  general  market,  silver  tends  to 
depreciate,  while  gold  is  asked  for.  More  than  500 
millions  in  silver  five-franc  pieces  are  already  accumu- 
lated at  the  Bank  of  France,  and  the  public  is  no 
longer  willing  to  receive  these  heavy  pieces.  Thus 
silver  appears  to  be  falling  into  disfavor,  and  we  must 
hasten  to  demonetize  it  if  we  do  not  wish  to  be  left  the 
last  to  be  encumbered  with  the  inconvenient  metal." 
The  preamble  of  the  French  Currency  Act  of  1876  says  : 
"From  1815  Great  Britain  has  laid  down  principles 
which  have  attracted  around  her  an  ever-increasing 
circle  of  nations ;  "  and,  further,  u  From  1857  tne 
French  Government  has  studied  the  question,  and  it 
may  be  stated  that  since  that  date  the  principle  of  the 
gold  standard  has  won  increasing  favor  through  our 
several  administrations."  The  German  economist,  Dr. 
Soetbeer,  began  to  discuss  the  question  in  1863,  and 
reported  to  a  congress  of  German  economists  in  1868, 
upon  which  Germany  decided,  one  year  later,  in  favor 
of  gold.  The  United  States  of  America  omitted  the 
silver  dollar  from  coinage  in  1873,  though  it  had  not 
been  in  use  for  forty  years.  Holland  adopted  the  gold 
standard  in  1875 ;  Denmark,  Sweden  and  Norway 
entered  a  gold-standard  union  in  1876  ;  and  Finland 


30 

adopted  that  standard  in  1877.  In  1873  Belgium  sus- 
pended free  coinage  of  silver  ;  the  other  States  of  the 
Latin  Union,  France,  Switzerland,  Italy,  etc.,  following 
in  January,  1874  ;  whereupon  the  Economist  Francaise 
said  :  "  It  is  a  step  toward  the  abolition  of  a  law  which, 
after  seventy  years'  experience,  had  been  found  to  be 
effete  in  theory  and  prejudicial  in  action."  Russia  dis- 
continued free  coinage  of  silver  in  1876. 

The  report  of  the  special  commission  of  the  upper 
house  of  Austro-Hungary  said,  1879,  tnat  "It  became 
clear,  as  long  ago  as  the  decade  1860-70,  when 
Europe  was  becoming  saturated  with  gold,  that 
this  was  the  only  metal  fitted  to  be  the  standard  of 
nations  of  advanced  civilization.  Gold  was  dominant 
and  the  standard  of  value  in  all  trade  on  a  great  scale 
as  early  as  the  fourteenth  and  fifteenth  centuries,  even 
though  silver  was  then  the  standard  in  all  domestic 
exchanges.  In  every  age  there  is  some  metal  dominant 
in  the  industry  of  the  world,  which  forces  its  way  with 
elemental  strength  in  the  face  of  any  public  regulation, 
and  in  our  day  gold  is  that  metal."  Italy  limited  silver 
coinage  in  1883;  Persia,  Rournania,  etc.,  later  on,  say 
1887;  later  still,  Chile.  All  this,  too,  despite  the  vari- 
ous monetary  conventions:  the  United  States  Commis- 
sion of  1876 ;  the  international  (Paris)  conventions  of 
1878  and  1 88 1 ;  the  independent  Paris  convention  in 
1887;  tne  Royal  Commission  (London),  1887;  and  the 
international  convention  (Brussels),  1892.  Here,  then, 
notwithstanding  these  six  monetary  congresses,  within 
thirty  years  after  France's  conclusion  that  gold  was  the 
best  standard  of  value,  because  of  its  greater  stability, 
utility  and  efficiency,  we  see  all  the  important  Western 


3* 

powers,  including  the  United  States  of  America,  Canada 
and  Australia,  on  the  gold-standard  basis,  that  is  to 
say,  those  peoples  that  transact  more  than  70  per 
cent  of  the  commerce  of  the  world,  and  whose 
governments  control  70  per  cent  of  the  world's 
population.  This  cannot  be  regarded  as  caprice,  or  as 
the  result  of  conspiracy,  but  is  a  natural  gravitation 
toward  greater  efficiency  in  money.  Says  one  of  the 
best  economic  writers  of  to-day:  "The  gold  standard 
has  made  its  way  in  the  world,  not  only  without  design 
on  the  part  of  individuals,  but  in  spite  of  the  strenuous 
resistance  of  almost  all  the  men  who  busied  themselves 
with  the  subject."  So  far  as  I  have  read,  the  changes 
have  all  been  from  silver  to  gold,  and  there  is  no  case 
on  record  of  a  change  from  gold  to  silver.  Whether 
these  changes  were  wise  or  unwise,  they  were  made,  and 
the  United  States,  alone  and  unaided,  cannot  undo  them. 
"It  is  a  condition  and  not  a  theory  that  confronts  us." 
If  silver  as  standard  money  is  now  going  out  of  use  in 
a  natural  way  we  cannot  stop  it,  and  the  attempt  to  do 
so  can  only  involve  us  in  trouble.  Yet  this  movement 
— the  supremacy  of  gold  as  the  standard — within  this 
century,  particularly  within  this  generation,  or  the 
past  four  decades,  has  been  multifariously  denounced 
as  a  demoniac  crime  against  humanity, — Prof.  Andrews 
himself,  at  Brussels,  as  already  quoted,  denouncing 
it  as  the  cause  of  "  the  baneful,  blighting,  deadly  fall 
in  prices,"  etc.;  that  the  fall  in  prices  of  commodities 
was  caused  by  the  action  of  the  Powers  in  adopting 
the  gold  standard ;  and  that  all  over  this  vast  area 
(the  gold-using  world)  it  has  afflicted  productive  in- 
dustry with  anaemia,  asphyxia  and  paralysis ;  that  it  has 


32 

been  an  absolute  and  unmitigated  curse  to  human  civil- 
ization ;  that  the  world's  wealth  to-day  is  less  by  billions 
than  it  would  be  had  what  he  calls  normal  monetary 
conditions  been  enjoyed. 

Let  us  examine  these  extraordinary  assertions.  First, 
however,  let  me  here  call  attention  to  the  scant  allusion 
in  Professor  Andrews'  pages  to  two  most  important 
factors,  which  he  has  almost  entirely  ignored  in  the 
consideration  of  this  question :  The  general  financial 
collapses  and  industrial  depressions  and  stagnations  of 
1815,  1826,  1837-41,  1848,  1857-61,  1865-66,  1873-77 
and  1883-85,  all  of  which  affected  Great  Britain,  France 
and  the  United  States  of  America,  save  that  of  1873-77, 
which  France  escaped  by  reason  of  the  previous  Franco- 
German  war  disaster.  That  of  1857-61  was  a  period 
in  which  primary  money, — money  of  ultimate  redemp- 
tion,— silver  as  well  as  gold,  was  in  full  force  and  effect, 
and  gold  more  plentiful  throughout  the  world,  com- 
paratively speaking,  than  at  any  other  period  of  history. 
Next,  that  the  enjoyment  by  the  laboring  class  (ninety- 
five  persons  out  of  every  hundred)  of  wages  on  a  gold 
basis,  which  have  not  fallen  as  compared  with  gold,  but 
have  risen  largely,  is,  in  degree  of  importance  to 
interest  on  all  forms  of  long-time  obligations,  at  least 
as  ten  to  one. 

By  reviewing  a  considerable  period  of  time,  espe- 
cially in  this  century,  we  find  that  the  general  tendency 
is  toward  lower  values ;  and  this  applies  not  only  to 
the  precious  metals,  but  to  all  products  of  man's  labor. 
Since  the  introduction  of  steam-power  machinery  and 
subdivision  of  labor,  the  tendency  toward  lower  prices 
has  been  more  decided  than  before.  To  obtain  a  more 


33 

abundant  supply  of  the  necessaries,  comforts  and  luxu- 
ries of  life  is  the  object  of  all  industry,  and  with  the 
increase  of  supply  comes  the  reduction  in  price.  This 
is  the  natural  order  of  progress,  of  civilization,  and 
I  offer  the  following  statistics  as  a  complete  refutation 
of  "  anaemia,  asphyxia  and  paralysis  "  in  the  industrial 
world. 

No  attempt  is  made  in  the  following  figures  to  be 
absolutely  exact  to  a  fraction.  They  are  intended, 
however,  to  show  by  close  approximation  the  general 
advance  in  the  industrial  and  commercial  world  during 
the  period  treated  of.  It  should  be  borne  in  mind  that 
the  natural  increase  of  population  is  only  a  slight  frac- 
tion over  one  per  cent  per  annum. 

Percentages  of  Increase  in  the  Production,  etc.,  of  Articles  in  the 
United  States,  1870-93. 

Barley 165 

Coal 400 

Corn 50 

Crops,  cereal 123 

Copper 1030 

Cotton 213 

Iron 328 

Lead 859 

Manufactures 276 

Oats 158 

Petroleum 860 

Potatoes 60 

Railroads,  mileage 250 

capital  and  bonded  debt 311 

earnings,  gross 168 

earnings,  net 51 

Rye 73 

Sugar 537 

Steel 4628 

Silver 200 

Gold 41 

Wheat ,  68 


34 

World. 

Sugar 100 

Gold 120 

Silver  (coinage  value)  approximately 300 

Coffee 260 

Coffee  shows  an  increased  value  of  from  65  to  85  per  cent, 
according  to  different  reports  upon  same. 


1842. 

1875. 

1885. 

1894. 

1895. 

Coffee,  tons  

200  ooo 

SOS  OOO 

718  ooo 

650  ooo 

72s!  OOO 

Total  value  of  crop 

$260  ooo  ooo 

$255  ooo  ooo 

" 

Productions  in  the   United  States. 


ARTICUS. 

1870. 

1880. 

1890. 

1893- 

1895. 

Barley,  bushels  

29,761,305 
33,000,000 
13,000 

760,944,549 
092  ^c. 
1,^77,477,432 

44,113,495 
63,822,830 

20,260 

1,754,861,535 

#5oc. 
2,686,145,028 

5-757,397 
$3-68 
3,840,000 
$28.50 
88,700 
407,858,900 
42.  6c. 
26,286,000 
94  J*c. 

63,000,000 
140,000,000 
115,000 
1,489,970,000 
£>48c. 
2,503,853,000 
7,313,726 

$2.00 

9,202,793 
$1840 

i6i,754 
523,621,000 
28.9C. 
46,000,000 
77c. 

69,869,000 
163,000,000 
147,000 
1,619,496,131 
#5oc. 
2,7,50,905,856 
6,717,142 
$1.44 
7,124,501 
$14.52 

163,983 
638,854,000 
35-9C. 
48,000,000 
64c. 
183,034,000 
$158,155,000 
26,555,000 
60,000,000 
3,215,686 
$28.12 
396,131,725 
#74c. 
303,000,000 
463,268,627 
4%c. 
6,547,6i5 

87,072,744 

Coal,  tons  

Copper,  tons  

Corn,  bushels  

2,151,138,580 
648c. 
3,556,967,806 
9,892,776 
$i-47 
9,446,308 
$13.10 

price  per  bushel  

Crops,  bushels  

Cotton,  bales  

3.154,346 
$440 
1,665,179 
$33-25 
17,830 
282,107,157 

Cut  nails,  cost  per  barrel  

Iron,  pig,  tons  

price  per  ton  

Lead,  tons  

Oats,  bushels  

824,443,537 
28.9C. 

price  per  bushel 

Petroleum  barrels  

5,000,000 
$386 
114,975,000 
$27,780,811 
16,918,795 
13,000,000 
68,750 
$106.75 
287,745,626 
a$i.29 
162  000,000 

178,304,592 

I26C. 

2,738,000 

price  per  barrel  
Potatoes,  bushels  .  .   .. 

297,237,370 
$140,959,361 
27,210,070 

Pensions,  amount  

$57,240,540 
19,831,595 
30.320 
1,250,000 
$67.50 

459479,503 
6$i.ai 

232,500,000 
207,877,278 
8^c. 
3,670,000 

$106,493,890 
28,000,000 
54,500,000 
4,277,071 
$3i-75 
399,262,000 
6980. 
276,000,000 
497,169,856 
6^c. 
5,500,000 

Rye,  bushels 

Silver,  production   ounces  

Steel  tons.  . 

Steel  rails,  price  per  ton 

$24-33 
467,102,947 
667C. 
294,296,000 
729,392,561 
4/8  c. 
7,291,500 

Wheat,  bushels  

price  per  bushel  

Wool  clip  pounds 

Sugar,  pounds  

price  per  pound  

world  production,  tons... 

a — Paper  value. 


b — Gold  value. 


35 

Railroads  in  the  United  States. 

Capital  and  Earnings,  Earnings, 

Miles.         funded  debt.  gross.  net.  Dividends. 

1871 52,920        2,644,627,645  403,329,209  141,746,404  56,456,681 

1894 181,454      10,741,363,319  1,080,305,015  322,539,276  85,278,669 

Or  an  increase  in  mileage  of  250  per  cent  in  24  years. 

1870 Total  railway  mileage  of  the  world 128,235 

1894 "  "  "        "     "       "     423,923 

An  increase  of  231  per  cent. 

In  the  United  States,  railway  mileage  increased  250  per  cent, 
capital  and  bonded  debt  "  311 
gross  earnings,  only         "  168       " 
11       net  earnings,        "  "     51       " 

Here  we  see,  in  the  item  of  capital  and  bonded  debt, 
the  pertinency  of  Professor  Farnham's  remarks  in  the 
Yale  Review  for  August,  1895,  as  follows  : 

{  When  we  consider  the  readiness  with  which  new 
and  hazardous  enterprises  are  entered  into,  the  large 
amount  of  business  that  is  done  on  foreign  capital,  and 
the  number  of  failures  from  insufficient  capital,  amount- 
ing in  the  United  States  to  about  one-third  of  the  total 
number,  it  seems  reasonable  to  hold  that  what  this 
country  needed  was  some  check  upon  speculation  quite 
as  much  as  a  stimulus." 

Average  freight  rate  per  bushel  of  wheat  for  trans- 
portation from  Chicago  to  New  York  : 

1870.  1893.  1895. 

By  lake  and  canal 17.1  cents.  6.y$  cents.  4.11  cents. 

By  lake  and  rail 22.       "  8.         "  6.95     " 

By  all  rail 33.3     "  14.7      "  12.17     " 

As  to  the  Atlantic  States  railways  we  find  the  charges 
per  ton  per  mile  as  follows : 


36 

1868.  1892. 

The  Boston  &  Albany  R.  R  ..............  28  mills.  16  mills. 

The  Fitchburg  Ry.  of  Massachusetts  ......  48      "  9 

The  Vermont  Central  System  .............  25      "  8 

New  York  &  New  England  Ry  ...........  64      "  12 

New  York,  New  Haven  &  Hartford  .......  51       "  18 

New  York  Central  Ry  ...................  26      "  7 

Lake  Shore  &  Michigan  Southern  .........  24      "  6 

Michigan  Central  ........................  25      '  *  7 

Cleveland,  Cincinnati,  Chicago  &  St.  Louis  .  .  19      "  7 


An  average  decrease  for  the  9  roads  of  70  per  cent. 

To   compare   railroad   freight  rates,  —  through  busi- 

ness, —  Pacific  System  : 

1872.  1894. 

Per  ton  per  mile,  east  bound.  23  mills.  9  mills. 

Per  ton  per  mile,  west  bound  .  25     "  8 

Per  ton  per  mile,  local  .......  44     '  '  25 

Passenger  rates,  all  classes.  .  38  mills  per  mile.  19  mills  per  mile. 

The  Interstate  Commerce  Commission  report  to  December  i, 
1894: 

Freight  revenue  per  ton  per  mile,  in  cents  or  fractions  of  a 
thousand  parts  : 

1888.  1889.          1890.          1891.         1892.          1893.          1894. 

i.  ooi          .922         .941         .895         .898         .878         .866 
A  reduction  in  seven  years  of  14  per  cent. 

Passenger  revenue  per  passenger  per  mile,  in  cents  or  fractions 
of  a  thousand  parts  : 

1888.  1889.         1890.         1891.          1892.          1893.          1894. 

2.349       2.165       2.167       2.142       2.126       2.108       1-976 
A  reduction  in  seven  years  of  16  per  cent. 

Mulhall,  in  the  North  American  Review  for  June, 
1895,  mentions  that  freight  charges  in  the  United  States 
in  1890  averaged  93  cents  (interstate  commerce  94 
cents)  per  ton  per  hundred  miles,  which  is  less  than 
half  the  charge  ($1.90)  now  prevailing  in  Europe,  and 
less  than  half  the  charge  prevailing  in  the  United 
States  twenty  years  ago.  The  difference  between  the 


37 

present  rates  in  the  United  States  and  Europe  implies 
a  saving  in  this  respect  alone  of  $845,000,000  yearly  to 
the  American  people,  or  10  per  cent  on  the  original 
cost  of  constructing  the  lines.  Does  anybody  consider 
this  fall  in  rates  a  "  baneful,  blighting,  deadly  "  influ- 
ence upon  the  interests  of  the  people  ? 

Savings  Banks. 

Up  to   1870  the  savings  bank  deposits  of  the  United  States 

reported  were $  549,874,358 

In  1887  they  reached 967,000,000 

In  1893  they  reached 1,809,000,000 

Total  resources  of  such  banks,  deposits,  surplus  and  capital 
represented  : 

In  1882 $1,053,000,000 

In  1893 2,014,000,000 

National  Banks,    United  States. 

Capital.  Net  earnings.       Per  cent. 

1873 $488,100,951    $65,048,578     13.3 

1891 760,108,201     75,763,514     9-9 

In  the  days  of  Charles  and  Cromwell  rates  of  interest 
in  England  were  10  per  cent.  At  present  a  2  ^  per  cent 
interest-bearing  consol  sells  above  par ;  and  a  gold-bear- 
ing 3  per  cent  United  States  bond  will  sell  above  par. 
The  rate  of  dividend  interest  in  California  savings  banks 
has  fallen  from  10  per  cent  in  1870  to  4  per  cent  in 
1895.  In  tne  Atlantic  States,  say  New  England  and 
New  York,  it  has  fallen  from  6  per  cent  in  1870  to  4 
and  3^  per  cent  in  1895. 

Money  in  the  United  States. 

1873 Money  per  capita,  $18 . 58 — chiefly  irredeemable  paper. 

1891 Money  per  capita,    34-31 

1896 Money  per  capita,    31 .  20 


38 

1 873..  Circulation  per  capita,  $18.04 — chiefly  irredeemable  paper. 
1 89 1..  Circulation  per  capita,    23.41 
1 896..  Circulation  per  capita,    22.47 

Wealth,  United  States. 

1860 $16,000,000,000 

1870 28,000,000,000 

1880 45,000,000,000 

1890 65,000,000,000 

In  1890  the  richest  country  in  the  world. 

This  extraordinary  increase  may  be  discounted  some- 
what because  of  the  crude  method  of  earlier  censuses. 

Wealth  of  Great  Britain,  France,  Spain,  United  States 
of  America,  Australia,  Tasmania  and  New  Zealand  and 
Canada  combined,  estimated  : 

1870 $100,000,000,000 

1890 200,000,000,000 

Gold,   World.  Silver,   World. 

1853 $155,000,000  (Commercial  Value.) 

1870 107,000,000  1870 $    51,575,000 

1874 91,000,000  1880 85,636,000 

1890 120,000,000      *i890 172,235,000 

1894 180,000,000         1894 I05»757,300 

1895 200,000,000         1895 120,000,000 

Present  annual  output  of  gold  alone  is  more  than 
annual  output  of  gold  and  silver  together  thirty  years 
ago. 

Estimate  of  world's  stock  of  coin  (U.  S.  Mint  Report, 
1894)  : 

1860 $3,900,000,000 

1894 8,021,000,000 

1896 8,300,000,000 

One  of  Professor  Andrews'  wails  is  that  "  Nations  in 
the  gold  group  can  no  longer  trade  freely  with  those  in 
the  silver  group."  The  movement  of  merchandise  and 
silver  in  connection  with  India  has  been  as  follows  : 


*The  price  of  silver  was  speculatively  inflated  in  1890,  owing  to  pending  legislation  by 
the  United  States  of  America,  the  result  of  which  was  a  dismal  failure. 


39 

Shipments  of  Bullion  and  Specie 

from  European  Money  Centers  to  Statement    of    Yearly    Tonnage 

Eastern  Countries.        (Including  Passing  Through  the  Suez  Canal 

Sundry  and  Alexandria,  to  1886.):  from  its  Opening  up  to  1894  : 

18,168,303 1862 

21,455,884 1863 

24,318,189 1864 

13,933,183 *865 

10,032,626 1866 

3,659,154 1867 

10,189,904  1868 

9,053,186 1869 


110,810,389 

4,5Q7r388 1870  436,609 

8,687,431 1871  761,467 

10,988,705 1872  1,160,743 

7,807,605 1873  1,367,767 

11,448,512 1874  1,631,650 

6,303,700 1875  2,009,984 

15,147,012 1876  2,096,771 

20,588,599 1877  2,355,447 


85,478,952  11,820,438 

8,403,350 1878  2,269,678 

I3»391»o86 1879  2,263,332 

10,983,339 1880  3,057,421 

7,985,996 1 88 1  4,136,779 

13,829,591 1882  5,074,808 

10,100,591 1883  5,775,86i 

14,040,596 1884  . . . : 5,871,500 

13,365,500 1885  6,335,752 


92,100,049  34,885,131 

7,572,596  1886  5,767,655 

8,541,505  1887  5,903,024 

7,118,243 1888  6,640,834 

11,380,823 1889  6,783,187 

11,507,122 1890  6,890,094 

8,809,828 1891  8,698,777 

12,317,887 1892  7,712,028 

14,667,799 1893  7,659,068 


81,915,803  56,054,667 

io,357,302 1894  8,039,175 

Yearly  tonnage  passing  through  the  Suez  Canal  was  : 

In  1870 436,609  tons 

In  1894 8,039,175    " 


40 

The  foreign  trade  of  India  has  more  than  doubled 
since  1872,  and  even  the  Lancashire  manufacturers, 
who  complain  so  bitterly,  have  more  than  doubled  their 
exports  of  cotton  goods  to  India.  The  quantity  of 
cotton  cloth  exported  to  India  in  the  year  1873  was 
990  millions  of  yards  ;  while  in  1894  the  total  had 
risen  to  the  enormous  amount  of  2,279  millions  of 
yards.  The  Secretary  of  the  Lancashire  Cotton  Spin- 
ners' and  Manufacturers'  Association  finds,  on  investi- 
gation of  the  facts,  that  while  silver  countries  have, 
since  1873,  increased  their  consumption  of  English 
cotton  cloth  by  100  per  cent,  gold  countries  have  only 
increased  it  by  17  per  cent,  and  India  has,  notwith- 
standing the  increase  in  Indian  mills,  increased  its 
consumption  of  English  cotton  manufactures  by  130 
per  cent. 

In  regard  to  the  increase  of  wages  on  a  gold  basis, 
Prof.  Andrews  uses  the  following  language  :  "  The 
average  value  of  labor,  including  unskilled,  has  not, 
in  my  belief,  advanced  so  much  as  gold,  even  if  it  has 
risen  at  all."  Rogers'  "  Economic  Interpretation  of 
History ;"  McKenzie's  "  History  of  the  Nineteenth 
Century  ;"  Walter  Besant's  "  Fifty  Years  Ago  ;"  the 
report  of  Robert  Giffen  to  the  British  Parliament  on 
the  progress  of  the  working  classes ;  one  by  Alfred 
Neymark  to  the  Statistical  Society  of  Paris  ;  Guyot's 
"  Economic  Science ;"  D'Avenal's  "  History  Econo- 
inique,"  as  shown  in  Schoenhof 's  "  History  of  Money 
and  Prices ;"  McMasters'  "  History  of  the  American 
People  ; "  C.  C.  Jackson's  "  Has  Gold  Appreciated  ;  " 
the  United  States  Senate  Committee  Report,  commonly 


41 

called  the  u  Aldrich  Report  on  Prices,  Wages  and 
Transportation,"  the  latter  work  a  monument  of  in- 
dustry, patience  and  intelligence,  and  other  literature 
on  the  subject  too  numerous  to  mention,  all  show  that 
wages  have  increased  in  fifty  years  under  the  gold 
standard  approximately  over  60  per  cent,  and  during 
this  century  100  per  cent.  After  examining  the 
Aldrich  Report,  Prof.  Taussig  said  :  "  All  in  all,  the 
figures  show  that  the  purchasing  power  of  money 
wages  has  been  rising  steadily  for  at  least  twenty 
years,  and  that  the  decline  in  prices  since  1873,  and 
especially  since  1882,  has  been  a  source  of  prosperity, 
and  not  of  depression,  to  the  community  at  large."  As 
to  what  has  been  the  result  to  wage-earners  under  the 
gold  standard  in  this  country,  I  submit  the  following 
conclusions  from  the  same  Report : 

Prices  and  wages  were  examined  from  1840  to  1892. 
The  evidence  demonstrated  beyond  all  controversy  two 
facts  :  (i)  that  wages,  measured  by  the  best  dollar, 
had  been  increasing  all  the  time ;  (2)  that  prices, 
measured  by  the  same  standard,  were  falling  during 
the  whole  fifty-two  years.  This  is  a  happy  condition 
for  the  wage-earner.  He  is  doubly  benefited  by  the 
standard  of  the  gold  dollar.  He  is  benefited  by  the 
constant  increase  of  his  daily  wage,  and  again  by  the 
constant  decline  in  the  prices  of  the  things  which  he 
must  buy.  From  1840  to  1892  the  rate  of  wages  in- 
creased in  the  United  States  over  60  per  cent,  while 
the  prices  of  things  he  had  to  buy  were  constantly  de- 
clining. The  investigation  covered  the  prices  of  223 
articles,  which  showed  an  average  reduction  of  25  per 


42 

cent.  Many  of  the  articles,  which  were  every-day 
necessaries  of  life,  declined  much  more  than  that.  Fuel 
fell  75  per  cent,  metal  39,  drugs  and  medicines  39,  and 
house-furnishing  goods  40  per  cent.  This  is  to-day  the 
wage-workers'  situation  on  a  gold  standard.  Let  us 
compare  it  with  the  paper-standard  era,  when  the 
country  had  the  highest  prices  it  has  ever  known. 

In  1866  the  unlimited  issue  of  paper  money  had 
banished  gold  from  our  circulation,  and  the  paper 
dollar  was  the  standard.  Wages  in  paper  money  had 
risen  52  per  cent  above  the  gold  rate  of  1860. 

At  the  same  time  we  find  that  beef  had  risen  108  per 
cent  above  the  gold  rate,  hams  198  per  cent,  New 
Orleans  molasses  135  per  cent,  rice  182  per  cent,  salt 
102  per  cent,  refined  sugar  85  per  cent,  calico  121  per 
cent,  ingrain  carpets  141  per  cent,  denims  274  per  cent, 
drillings  265  per  cent,  sheeting  291  per  cent,  shirting 
222  per  cent,  coal  201  per  cent,  nails  132  per  cent,  pine 
shingles  121  per  cent,  window  glass  10  x  14,  126  per 
cent,  and  quinine  131  per  cent.  Here  we  see  that  a 
depreciated  standard  of  value  robbed  wage-earners  of 
more  than  half  their  earnings.  Of  all  the  contrivances 
for  cheating  the  laboring  classes  of  mankind,  none  is 
more  effectual  than  a  currency  that  is  not  convertible 
into  metallic  money  of  intrinsic  equivalency. 

I  appreciate  that  estimating  total  relative  prices  with- 
out regard  to  relative  importance  or  consumption  of 
commodities  is  misleading,  and  in  an  analysis  of  such 
data,  grouped  according  to  relative  importance  of  com- 
modities, it  showed  that  the  fall  in  prices  was  6  per  cent 
less  than  otherwise  shown.  That  is  to  say,  taking  100 


43 

as  a  standard  of  average  from  the  years  of  1865  to  1869, 
the  fall  from  1870  to  1885  was  24  per  cent,  as  against 
30  per  cent  where  the  relative  importance  of  com- 
modities was  not  considered.  Eleven  leading  products 
of  farms  in  the  United  States  fell  26  per  cent. 


Prices. 

1873- 

Print  cloth,  per  yard $       .066 

Quinine,  per  ounce 2 . 65 

Goblets,  per  dozen .85 

10  x  14  glass 3.40 

Undershirts 1.41 

Ginghams,  per  yard 13 

Carpets,  two-ply  ingrain,  per  yard . .       1 . 14 

Black  pepper,  per  pound .19 

Molasses,  per  gallon .69 

Freight  rate,  per  ton 2 .  oo 

Refined  sugar,  per  pound .116 

Cut  nails,  per  pound .049 

Pig  iron,  per  ton 42 . 75 

Cotton,  per  pound 188 

Corn,  per  bushel .61 

Wheat,  per  bushel 1.31 


Bacon  and  hams,  per  pound 

Lard,  per  pound , 

Pork,  per  pound 

Beef,  per  pound , 

Butter,  per  pound 

Cheese,  per  pound 

Tobacco,  per  pound , 

Eggs,  per  dozen 

Leather,  per  pound , 


.088 
.092 
.078 
.077 

.211 

.131 
.107 
.26 

.253 

Starch,  per  pound .053 

Illuminating  oils,  per  gallon 235 

Steel  rails,  per  ton 120. 50 


Rio  coffee,  per  pound, 

Tea,  per  pound 

Sheeting,  per  yard... 

Drilling,  per  yard 

Shirting,  per  yard 

Standard  prints 


.18 

•95 

•133 

.141 

.194 


1891.  Per  cent 

1  -029 

56 

•30 

89 

•25 

70 

1.70 

50 

.62 

56 

.06 

54 

•50 

56 

.09 

53 

•32 

53 

.92 

54 

•057 

50 

.016 

62 

17.50 

60 

.  10 

53 

•57 

6 

•93 

3° 

.076 

14 

.069 

25 

•  059 

24 

.056 

27 

•145 

32  V 

.09 

3i  ] 

.087 

19  ! 

-17 

35  / 

.16 

36 

.032 

40 

.07 

70 

29.92 

75 

.16 

ii 

•25 

73 

.068 

48 

.064 

55 

.106 

45 

.06 

47 

Average 
fall  of  26 
per  cent. 


Average  reduction  in  eleven  chief  farm  products,  26  per  cent, 
reduction  in  twenty-three  other  products,  55  per  cent. 


Average 


44 

According  to  Dr.  Krai's  tables  for  Hamburg,  without 
going  into  details,  the  average  of  prices  of  all  vege- 
tables and  animal  food  was  considerably  higher  in  1884 
than  it  was  in  1844, — forty  years  previously. 

Relative  wages  and  prices  in  gold  in  the  United 
States  of  all  occupations,  taking  wages  of  1860  as  100: 

Prices.  Wages.  Prices.  Wages. 

1840 Il6.8  87.7          1871 122.9  147-8 

1850 102.3  92.7          1880 106.9  141-5 

1860 100  100             1890 92.3  158.9 

1870 117.3  133.7         I89i 92-2  160.7 

The  latest  data  obtainable  shows  that  the  annual 
average  money  wages  of  manual  laborers  in  Great 
Britain  increased  from  ^43  8s.  in  1876  to  ^53  i6s.  in 
1892,  or  over  23  per  cent  in  fifteen  years,  though  this 
may  have  been  partly  due  to  restrictions  on  child  labor; 
but  the  increase  from  1845  to  1895  has  been  relatively 
as  great  as  in  the  United  States. 

According  to  investigations  of  Yves  Guyot,  also  J.  B. 
Say,  separately,  the  increase  of  wages  in  France  from 
1805  to  1883  was,  in  a  superficial  average  upon  ten 
callings,  such  as  day  laborers,  cellar  diggers,  stone- 
cutters, brickmasons,  carpenters,  blacksmiths,  etc.,  120 
per  cent ;  and  the  greatest  advance  in  one  of  the  five 
divisions  of  time  into  which  this  period  was  classified 
was  in  that  from  1875  to  I^^3)  tne  wages  of  carpenters 
and  laborers  having  increased  over  33  per  cent  and 
those  of  cabinet  makers  50  per  cent  within  that  brief 
period,  at  the  very  time  when,  according  to  bimetallists' 
theories,  wages  ought  to  have  fallen. 

If  a  day's  labor  be  a  reasonable  unit  of  value,  as  some 
economists,  even  Adam  Smith,  have  contended,  it  is 


45 

certain  that,  judged  by  that  standard,  gold  has  not 
risen.  I  assert  that  the  facts  submitted  utterly  disprove 
Professor  Andrews'  contention  of  "  anaemia,  asphyxia 
and  paralysis."  This  country  is  not  so  much  in  need 
of  more  money  as  it  is  of  more  common  sense  and  less 
hysteria. 


To  answer  upon  a  historic  basis  the  theories  of  the 
international  bimetallists,  it  is  enough  to  say  that  no 
form  of  bimetallism  by  which  the  two  metals  were 
coined  without  limit  and  were  legal  tender  has  ever 
succeeded.  This  is  the  unvarying  verdict  of  history. 
For  six  hundred  years,  that  is  to  say,  since  Florence 
began  the  minting  of  gold  florins  in  1252,  which 
quickly  extended  to  France,  Flanders,  Germany,  and, 
later,  to  England,  there  have  been  a  succession  of 
reratings  throughout  the  entire  world  in  the  endeavor 
to  keep  the  two  metals  together,  and  fluctuations  of  less 
than  one  per  cent  in  the  difference  between  the  com- 
mercial value  and  the  coinage  value  of  each  have 
always  been  sufficient  to  exclude  the  more  valuable 
from  circulation ;  and,  under  present  facilities  of  com- 
munication and  exchange,  one-fourth  of  one  per  cent 
would  be  sufficient  to  produce  the  same  effect. 

In  the  Overland  Monthly  for  the  present  month  of 
February,  in  an  article  on  "  Hard  Times,"  Irving 
M.  Scott  says : 

"  Europe,  from  early  times  down  to  a  late  date, 
employed  both  gold  and  silver  as  the  (  standard  of 
value/  This  country,  in  its  colonial  and  confederate 


46 

conditions,  did  the  same.  The  United  States,  from  the 
foundation  of  the  Government  (constitutional)  down  to 
1873,  employed  both  gold  and  silver,  in  accord  with  an 
Act  of  Congress  making  the  standard  unit  of  value 
(  One  Dollar,'  of  a  certain  fineness.  Thus,  from  1687 
to  1873,  embracing  a  period  of  186  years,  our  country 
employed  both  the  silver  dollar  and  the  gold  dollar — 
equal  one  to  the  other — as  the  standard  unit  of  value 
and  as  redemption  money.  Thus  it  is  seen  that  from 
time  immemorial  gold  and  silver  worked  together  har- 
moniously. A  greater  production  of  one  or  the  other  did 
not  affect  the  parity  established  between  them" 

The  closing  assertion  by  a  business  man  of  Mr. 
Scott's  standing  is  astonishing,  for  the  facts  are  exactly 
the  opposite.  In  India,  at  the  time  of  Alexander's 
invasion,  silver  to  gold  was  as  2  to  i,  but  in  conse- 
quence of  the  rapid  extension  of  commerce  the  ratio 
soon  reached  6  to  i.  In  Athens,  at  the  zenith  of 
her  power,  the  ratio  at  one  time  reached  13  to  i. 
At  a  little  earlier  period  the  ratio  with  the  Romans 
was  10  to  i.  They  allowed  the  ^olians  to  pay  their 
annual  tribute  in  either  silver  or  gold  at  this  ratio. 
Between  the  fifth  and  thirteenth  centuries,  the  great 
national  formative  period,  gold  was  hoarded,  and,  though 
Byzantine,  Arabian,  Egyptian  and  Spanish-Moorish 
gold  coins  were  to  be  found  in  circulation  occasionally, 
there  was  no  gold  coinage  by  Western  Europe  until 
the  close  of  the  twelfth  or  the  beginning  of  the 
thirteenth  century,  the  impetus  having  been  given  by 
the  Crusaders.  There  never  was  agreement  in  the 
thirteenth,  fourteenth  or  fifteenth  centuries,  and  the 
sudden  yield  of  money  metals  by  the  New  World 


47 

utterly  upset  the  mintage  ratios  of  all  Europe 
during  the  sixteenth  and  seventeenth  centuries. 
There  never  was  anything  like  an  equal  and 
generally  recognized  ratio  of  value  between  gold 
and  silver  prevailing  at  any  single  point  of  time. 
At  one  and  the  same  date  a  ratio  of  7  or  8  to  i 
prevailed  in  the  Moorish  parts  of  Spain,  and  12  to  i 
in  the  Christian  parts  (the  kingdom •  of  Castile). 
Similarly,  at  a  later  period,  in  1474,  the  ratio  in 
England  was  11.15;  ^n  Germany  11.12;  in  France 
11.00;  in  Italy  10.58;  and  in  Spain  9.20.  Vasco  de 
Gama  found  the  ratio  prevailing  in  South  America 
with  the  Indians  8  to  i.  Changes  of  ratio  in  Europe 
under  the  influence  of  New  World  metallic  product  are 
indicated  by  the  following  figures  : 

1545-60 11.30  to  i         1621-40 14.00  to  i 

1561-80 11.5°  to  i          1641-60 14-50  to  i 

1581-1600 11.80  to  i          1661       15.00  to  i 

1601-20 12.25  to  i 

Or  from  1545  to  1660,  a  period  of  115  years,  the  ratios 
of  the  two  metals  varied  33  per  cent.  And  it  is 
reasonably  certain  that  all  important  monetary  trans- 
actions in  England  prior  to  the  Elizabethan  reforma- 
tion of  the  coinage,  under  Gresham,  were  settled  by 
weight  and  not  by  tale. 

Lord  Liverpool,  writing  in  1805,  says : 
'  The  price  of  silver  in  dollars  has  varied  in  twenty- 
three  years, — that  is,  from  the  end  of  the  year  1774  to 
the  3ist  of  December,  1797, — 12  per  cent  (in  round 
figures),  and  even  in  the  course  of  one  year,  that  of 
1797,  no  less  than  9^  per  cent.  The  variation  in 
the  price  of  silver  bullion  appears  to  have  been  still 


48 

greater,  by  another  account,  with  which  I  have  been 
favored,  by  the  later  Mr.  Garbett,  an  eminent  merchant 
and  manufacturer  at  Birmingham;  it  there  appears 
that  silver  purchased  by  him,  as  a  refiner,  varied,  accord- 
ing to  his  calculation,  in  the  course  of  ten  years,  to 
1793,  more  than  19 %  per  cent,  and  in  one  year  alone 
more  than  13^/3  per  cent." 

In  the  500  years,  from  the  fourteenth  to  the 
eighteenth  centuries  inclusive,  there  were  over  400 
changes  or  reratings  throughout  Continental  Europe  ; 
and  even  a  cursory  knowledge  of  the  history  of  coinage 
of  the  last  500  years  in  the  world  will  show  that  not 
alone  has  bimetallism,  with  free  coinage,  failed  in 
Europe,  but  it  failed  also  in  India ;  that  two  distinct 
attempts  were  made  there,  both  of  which  resulted  disas- 
trously. The  difficult  character  of  the  question,  as  well 
as  the  nature  of  money  dealings  in  the  past,  is  well 
illustrated  in  a  few  words  taken  from  Mr.  D'Avenal,  the 
French  author  of  u  Economic  History,"  as  interpreted 
by  Mr.  Schoenhof.  Writing  of  former  times,  he  says: 

uAn  endless  number  of  disks  of  gold,  silver  and 
billon  were  coined  by  all  sorts  of  people  in  all  kinds 
of  countries,  and  these  people  had  to  value  in  livres, 
sous  and  deniers,  at  their  true  valuation,  by  weight  and 
fineness.  The  barons  and  prelates  who  coined  money 
regularly  in  the  thirteenth  century  numbered  eighty. 
There  were  consequently  eighty  coining  standards,  but 
in  reality  there  were  a  good  many  more.  Besides  this, 
there  were  quite  a  number  of  pieces  circulating  of  much 
more  ancient  date." 

This  author  also  pertinently  remarks  that  "  the  cur- 
rent value  of  money  does  not  obey  the  ordinances  of 
kings,"  that  is,  legal  enactment,  government  fiat. 


49 

Apart  altogether  from  the  arbitrary  debasement  of  the 
coin,  apart  even  from  the  changes  of  the  ratio  enacted 
with  the  mere  crafty  design  of  inducing  a  flow  of  gold, 
the  monetary  systems  of  the  times  were  so  rough,  so 
unscientific,  the  tariffing  of  the  coins  of  different  na- 
tions against  each  other  so  inexact,  of  so  hasty  average, 
that  it  was  simply  impossible  to  provide  general  tables 
of  equivalents  of  coins.  The  mint  conventions  of  con- 
tiguous States  in  Europe  in  the  sixteenth  century  were 
so  frequent  that  their  history  has  been  characterized  as 
a  jungle  of  intricacies.  A  modern  writer  has  said  that 
to  pick  out  and  enumerate  all  the  changes  of  ratings  in 
Europe  in  a  period  of  600  years — the  thirteenth  to  the 
eighteenth  centuries  inclusive — would  be  like  counting 
the  stars  in  the  Milky  Way.  And  in  France,  the  cri- 
terion of  the  silverites,  there  were  150  changes  in  less 
than  that  number  of  years  in  the  fifteenth  and  sixteenth 
centuries.  During  the  French  Revolution  the  ratings 
of  gold  and  silver  were  changed  over  sixty  times,  with 
no  effect  whatever  save  to  cheat  the  people.  In  that 
country,  from  1820  to  1850,  silver  expelled  gold,  achiev- 
ing a  proportion  as  currency  of  91  to  9,  while  gold 
only  was  in  effective  circulation  from  1850  to  1873. 
Said  the  Chevalier  Baisse,  in  his  "  Problem  of  Gold," 
written  in  1859: 

"  A  change  of  ij^  per  cent  in  favor  of  gold  sufficed, 
thirty  or  forty  years  ago,  to  cause  that  metal  to  dis- 
appear wholly  from  commercial  payments.  Under  the 
regime  of  the  law  of  the  yth  Germinal,  year  XI  (1803), 
gold  had  ceased  to  figure  in  transactions  of  any  magni- 
tude since  it  had  acquired  an  appreciable  premium. 
People  took  their  gold  to  the  money  changer  in  order 


50 

to   pocket   the   premium,  and   made  payments  exclu- 
sively in  silver,  as  every  investigator  knows." 

Gold  and  silver  never  have  at  any  time  or  place  cir- 
culated freely,  concurrently  and  indiscriminately  as 
legal-tender  coins  at  fixed  ratios  under  unrestricted 
coinage. 

It  was  the  unbroken  experience  of  centuries  when 
Locke  took  up  the  question  in  England,  as  it  has  been 
the  experience  ever  since,  that  side  by  side  with  the 
legal  ratio  there  is  immediately  a  market  ratio,  and 
there  is  no  discernible  tendency  for  the  former  to 
govern  the  latter.  The  laws  that  finally  govern  finance 
are  not  made  in  conventions  or  congresses.  The  foun- 
dation of  the  bimetallic  idea  is  thus  erroneous  from  the 
beginning,  and  there  is  no  discoverer  or  great  econo- 
mist to  set  against  the  chain  of  authorities  by  which 
the  opposite  system  has  been  established. 

Locke  gave,  as  sufficient  reason  why  silver  was  then 
the  best  money  of  account,  that  the  world  had  so 
decided, — that  the  world  of  commerce  had  so  decided, — 
and  that  it  is  enough  that  the  world  had  agreed  on 
it  and  made  it  their  common  money.  And  this  is 
sufficient  reason  to-day  why  gold  is  the  standard 
money, — money  of  ultimate  redemption  with  Western 
nations, — because  all  the  progressive  nations  of  the 
world  have  made  it  so,  and  that  out  of  regard  to  its 
superior  efficiency. 

I  would  not  have  my  hearers  assume  that  scientists 
or  economists,  because  they  are  ancient,  are  neces- 
sarily to  be  deemed  infallible.  About  the  last  of  the 
sixteenth  century,  Davanzate  said  :  "  All  commodities 


51 

which  serve  to  satisfy  the  wants  of  man  are  by  con- 
vention equal  in  value  to  all  the  gold,  silver  and  cop- 
per." It  would  seem  incredible  that  such  an  idea 
could  have  been  entertained,  yet  it  must  have  been, 
for  Montesquieu  appears  to  have  adopted  it,  because 
Chevalier  took  the  trouble  to  refute  it  as  coming  from 
him  by  simply  pointing  out  that  the  money  quantities 
of  France  were  estimated  at  3^  milliards  of  francs  in 
value,  while  the  value  of  real  property  alone  amounted 
to  83  milliards  of  francs. 

We  have  spoken  of  the  Oresme,  Copernicus,  Gres- 
ham  Law,  which  was  expounded  by  Locke,  Newton 
and  other  eminent  men  of  the  times  to  the  government 
of  Great  Britain,  but  a  knowledge  of  its  workings  did 
not  reveal  to  them  a  remedy  for  continually  recurring 
evils  of  coinage,  viz,  the  variations,  the  parting  of  the 
metals,  the  breakdown  of  parity  of  coin  in  circulation, 
etc.,  which  was  universal.  The  remedy  was  not  per- 
ceived even  by  the  great  expounders  of  the  Gresham 
Law.  A  solution  was  found  by  Sir  William  Petty, 
who  died  in  1687,  in  a  treatise  of  his  discovered  in 
1691,  viz,  to  make  one  metal  the  standard  money, 
and  the  other  subsidiary  to  it;  that  so  much  subsidiary 
coin  as  could  be  kept  in  free  circulation,  redeemable  in 
or  exchangeable  with  the  standard  metal  coin,  was  not 
only  the  best  but  the  only  method  practicable  for  using 
both.  That  there  could,  of  course,  be  no  such  thing 
as  a  double  standard,  and  the .  greatest  stability  of 
money  was  to  be  attained  by  using  one  metal  as 
standard.  This  theory  was  elaborated  at  a  later  date 
by  Adam  Smith. 


52 

The  best  brief  exposition  extant  of  money  on  this  basis 
— the  Gresham-Petty  laws — is  by  Lord  Liverpool,  at  the 
beginning  of  this  century, — say  about  1805, — as  follows: 

u  The  standard  coin  of  a  country  is  the  measure  by 
which  the  value  of  all  things  bought  and  sold  is  regu- 
lated and  ascertained,  and  it  is  itself,  at  the  same  time, 
the  value  or  equivalent  for  which  goods  are  exchanged, 
and  in  which  contracts  are  generally  made  payable. 
In  this  last  respect  the  standard  coin,  as  a  measure, 
differs  from  all  others,  and  to  the  combination  of  the 
two  qualities  before  defined,  which  constitute  the  essence 
of  this  standard  coin,  the  principal  difficulties  that 
attend  it  in  speculation  and  practice,  both  as  a  measure 
and  an  equivalent,  are  to  be  ascribed.  These  two  qual- 
ities can  never  be  brought  perfectly  to  unite  and  agree ; 
for  if  the  standard  coin  were  a  measure  alone,  and  made, 
like  all  other  measures,  of  a  material  of  little  or  no 
value,  it  would  not  answer  the  purpose  of  an  equivalent. 
And  if  it  is  made,  in  order  to  answer  the  purpose  of  an 
equivalent,  of  a  material  of  value,  subject  to  frequent 
variations,  according  to  the  price  at  which  such  material 
sells  at  the  market,  it  fails  on  that  account  in  the  qual- 
ity of  a  standard  or  measure,  and  will  not  continue  to 
be  perfectly  uniform  and  at  all  times  the  same.  Civil- 
ized nations  have  generally  adopted  gold  and  silver  as 
the  material  of  their  standard  coin,  because  these  metals 
are  costly  and  difficult  to  procure,  little  subject  to  varia- 
tion in  value,  durable,  divisible,  and  easily  stamped  or 
marked." 

Lord  Liverpool  was  not  insensible  to  the  possibility 
of  a  change  in  the  value  of  a  money  metal  in  respect  of 
itself,  and  that  the  standard  metal  might  so  vary  ; 
but  he  held  this  difficulty  to  be  so  essentially  inherent 
as  not  to  be  susceptible  of  remedy. 


53 

Following  the  teachings  of  Gresham,  Locke,  Newton 
and  Petty,  Great  Britain,  after  the  most  careful  consid- 
eration, and  after  centuries  of  monetary  welter,  decided 
in  1816  to  legally  adopt  the  gold  standard,  though,  as 
already  stated,  because  of  its  efficiency,  gold  had 
really  been,  through  the  custom  and  usage  of  merchants 
as  well  as  by  proclamation,  the  money  of  commerce  for 
one  hundred  years  previously.  The  master  of  the  mint 
declared  in  1816  that  the  law  merely  established  and 
legalized  the  system  which  had  been  adopted  by  public 
opinion  since  1717.  So,  also,  the  Acts  of  the  United 
States  Congress  of  1853  and  1873  merely  carried  into 
full  legal  effect  the  Acts  of  1834-37,  a  fact  of  nearly 
forty  years. 

As  already  stated,  there  is  not  a  trace  in  the  writings 
of  American  statesmen  of  the  peculiar  monetary  theory 
on  which  bimetallism  is  now  based.  The  conclusion 
that  commodity  values  absolutely  rule  coinage  values 
was  concurred  in  and  accepted  by  the  statesmen  of  our 
own  country, — Morris,  Gallatin,  Hamilton,  Madison, 
Jay,  Jefferson,  and  other  founders  of  our  American 
Republic,  and,  later  on,  Webster,  Clay,  Jackson, 
Benton,  Tilden,  Cleveland,  and  others.  Jefferson  said, 
among  other  and  similar  utterances  on  the  subject : 
"  Just  principles  lead  us  to  disregard  legal  proportions 
altogether,  to  inquire  into  the  market  price  of  gold  in 
the  several  countries  with  which  we  shall  be  principally 
connected  in  commerce,  and  to  take  an  average  from 
them."  This  conclusion  was  followed  in  1834  by  the 
United  States,  as  indicated  by  the  following,  taken  from 
the  Report  of  Currency  Committee  to  Congress,  June 
30,  1832  : 


54 

"  The  Committee  think  that  the  desideratum  in  the 
monetary  system  is  the  standard  of  uniform  value. 
They  cannot  ascertain  that  both  metals  have  ever  circu- 
lated simultaneously,  concurrently  and  indiscriminately 
in  any  country  where  there  are  banks  or  money 
dealers ;  and  they  entertain  the  conviction  that  the 
nearest  approach  to  an  invariable  standard  is  its  estab- 
lishment in  one  metal,  which  metal  shall  compose  ex- 
clusively the  currency  for  large  payments," — that  is  to 
say,  standard  money, — money  of  commerce,  money  of 
ultimate  redemption.  This  conclusion  is  impregnable. 

The  only  rational  bimetallism  possible  is  the  circula- 
tion of  so  much  silver  as  may  be  kept  freely  inter- 
changeable with  gold  and  as  may  be  necessary  for  the 
minor  transactions  of  trade.  All  silver  hoarded  by 
Government  in  excess  of  this  means  the  withdrawal  of 
just  so  much  capital  from  active  operations  in  the 
hands  of  the  people, — for  illustration,  the  present  mone- 
tary status  in  the  United  States,  which  is  a  perverted 
example  of  the  bimetallism  of  Sir  William  Petty.  To 
assure  the  use  of  gold  and  silver  at  the  same  time  on  a 
par,  gold  must  be  the  standard,  and  the  coinage  of  silver 
so  limited  that  the  Government  can  maintain  their 
exchangeability.  And  under  such  a  policy  any  excess 
of  silver  beyond  the  actual  uses  of  it  by  the  people  is, 
as  stated  above,  just  so  much  capital  withdrawn  from 
active  operations,  because  the  excess  is  useless  for  pur- 
poses of  redemption  and  is  a  menace  to  the  redemption 
money.  If  the  coinage  cannot  be  circulated,  then  it  is 
waste  to  lock  it  up  and  circulate  the  paper  instead, 
entailing  all  the  disadvantages  of  paper  without  the 


55 

advantage  of  its  economy.  The  excess  of  silver  over 
what  can  be  practically  used  in  active  circulation  is  not 
more  defensible  than  the  Populists'  farm-product  Sub- 
Treasury  schemes.  The  important  point  here  is,  that 
with  all  the  complexity  and  confusion  originating  in 
notions  of  making  money  abundant  (which  will  be 
referred  to  later  on  under  the  head  of  "CURRENCY"), 
our  Government  has  arrived  at  nothing  and  has  effected 
nothing  which  might  not  have  been  effected  better  by  a 
thoroughly  monometallic  system,  with  gold  for  the 
standard. 

"  While  it  is  admitted  that  no  single  nation  can,  by  a 
legal-tender  law,  make  a  money  buy  more  in  the  market 
than  it  is  worth  as  property,  it  is  asserted  that  an  agree- 
ment among  the  nations  having  commercial  relations  to 
make  depreciated  silver  full  legal  tender  at  an  univer- 
sally uniform  ratio  would  put  it  on  a  par  with  gold  in 
the  markets  of  the  world.  Then  would  fifty  cents'  worth 
of  silver,  coined  in  a  dollar  piece,  buy  an  hundred  cents' 
worth  of  gold  or  of  any  other  property.  Such  an  agree- 
ment and  its  accompanying  legislation  would  be  abso- 
lutely barren  and  powerless  to  effect  the  proposed  result, 
because  trade  alone  fixes  values,  and  nations  as  nations 
do  not  trade  with  each  other.  Governments  are  not 
traders.  They  are  not  in  commerce.  They  neither 
buy  nor  sell.  Their  individual  citizens  trade  with  each 
other  according  to  the  unchanging  element  of  human 
interest.  The  government  of  each  furnishes  protection 
and  facilities  for  trade  to  its  merchants,  its  selling  pro- 
ducers and  its  buying  consumers.  But  governments 
themselves  are  not  merchants.  They  do  not  owrn  the 
exchangeable  properties  of  their  citizens.  They  do  not 
bargain  them  away.  They  have  nothing  to  do  with 
their  price.  They  have  nothing  to  do  with  what  is 


56 

taken  in  exchange  for  them,  nor  with  the  rate  at  which 
one  is  exchanged  for  the  other.  They  keep  the  peace, 
protect  property,  administer  justice,  make  it  safe  and 
convenient  for  their  merchants  and  their  customers  to 
deal  with  each  other  within  their  several  jurisdictions, 
enforce  for  them  their  lawful  contracts,  and  there  they 
stop.  They  are  no  part  of  the  world  of  trade.  They 
can,  each  within  its  own  territory,  rob  creditors  by  legal- 
tender  acts  which  are  false  to  the  facts  and  ethics  of 
trade,  and  so  drive  away  capital ;  but  they  can  no  more 
change  the  exchangeable  value  or  commercial  function 
of  the  money  of  trade  than  they  can  change  the 
exchangeable  ratios  of  cotton,  hay,  iron,  cows,  steam- 
ships, or  any  other  form  of  property  in  which  men  deal 
with  each  other  according  to  their  needs  and  their 
mutual  agreement  upon  values.  If  they  could,  all  they 
would  have  to  do  to  secure  eternal  commercial  tran- 
quillity would  be  to  enact  all  forms  of  property  to  be 
money,  all  unlimited  legal  tender,  fix  their  ratios  to 
each  other  once  for  all,  and  then  let  the  world  run." 

It  is  as  impossible  for  the  whole  world,  by  inter- 
national agreement,  to  maintain  coins  of  two  or  more 
metals  in  circulation,  in  unlimited  quantities,  at  a  fixed 
legal  ratio,  differing  from  the  relative  natural  or  market 
value  of  the  metals  of  which  they  are  composed,  as  it  is 
for  separate  and  independent  nationalities  to  do  it,  and 
the  latter  never  has  been  done. 


Let  us  now  consider  the  status  of  the  international 
bimetallic  movement  after  twenty  years  of  agitation. 
At  the  Brussels  Convention  of  1892  the  delegates  of  the 
United  States  were,  under  date  of  November  22,  1892, 
thus  instructed  by  Secretary  of  State  John  W.  Foster  : 


57 

"  You  should  not  lose  sight  of  the  fact  that  no  arrange- 
ment will  be  acceptable  to  the  people  or  satisfactory  to 
the  Government  of  the  United  States  which  would,  by 
any  possibility,  place  this  country  on  a  silver  basis  while 
European  countries  maintain  the  single  gold  standard" 

The  British  delegates  asserted  from  the  outset  that 
they  would  not  adopt  bimetallism  on  the  basis  of  free 
coinage  ;  Germany  and  Austro-Hungary  let  it  be  known 
that  they  would  not, — at  least  not  without  the  con- 
currence of  Great  Britain ;  France  explicitly  declared 
this  to  be  her  attitude  ;  and  Weber  for  Belgium,  Forssell 
for  Scandinavia,  and  Rafifalovich  and  De  Thoener  for 
Russia,  declared  that,  in  the  years  that  had  elapsed 
since  former  conventions, — 1878,  1881, — they  had  seen 
no  reasons  for  changing  their  convictions  against  it, 
citing  examples  to  show  how  utterly  impossible  it  is,  in 
monetary  matters,  to  resist  natural  forces  by  statutory 
laws  or  agreements.  Forssell  of  Sweden  voiced  similar 
sentiments  with  a  force  and  originality  of  reasoning,  a 
wealth  of  learning  and  illustration,  and  a  caustic  wit, 
not  exceeded  by  any  member  of  the  convention.  Said 
Forssell :  "  The  question  is,  What  should  be  the  size  of 
a  hogshead  to  contain  a  certain  quantity  of  liquid  when 
there  is  no  possibility  of  stopping  the  bunghole?" 
And,  further,  u  If  the  conference  of  Brussels  contributes 
to  establish  and  fortify  the  conviction  that  an  interna- 
tional agreement  for  the  free  and  unlimited  coinage  of 
silver  is  not  only  rejected  for  the  moment,  but  is 
inadmissible  for  the  future,  it  will  have  reached  a  very 
important  result." 

So  the  Brussels  Convention  closed  with  the  following 
glittering  generality  in  the  way  of  a  resolution, — a 


58 

diplomatic  courtesy  of  Baron  de  Renzis,  the  Italian 
delegate,  who  represented  the  Latin  Union,  in  the  ab- 
sence of  Mr.  Tirard,  French  delegate : 

"  The  International  Monetary  Conference,  recogniz- 
ing the  great  value  of  the  arguments  which  have  been 
developed  in  the  reports  presented  and  in  the  discus- 
sions at  the  meetings,  and  reserving  its  final  judgment 
upon  the  subjects  proposed  for  its  examination,  ex- 
presses its  gratitude  to  the  Government  of  the  United 
States  for  having  furnished  an  opportunity  for  a  fresh 
study  of  the  present  condition  of  silver. 

"  The  conference  suspends  its  labors  and  decides, 
should  the  governments  approve,  to  meet  again  the  3oth 
of  May,  1893.  It  expresses  the  hope  that  during  the 
interval  the  careful  study  of  the  documents  submitted 
to  the  conference  will  have  permitted  the  discovery  of 
an  equitable  basis  for  an  agreement  which  shall  not 
infringe  in  any  way  the  fundamental  principles  of  the 
monetary  policy  of  the  different  countries." 

But  the  real  status  had  been  previously  expressed 
by  Mr.  Tirard  in  the  Convention,  and,  as  France  is 
constantly  cited  by  the  silver  agitators,  I  ask  my 
hearers'  indulgence  for  quoting  at  some  length  Mr. 
Tirard,  then  Minister  of  Finance  of  the  French  Re- 
public and  Governor  of  the  Bank  of  France.  Said  Mr. 
Tirard : 

"  Gentlemen,  I  believe  that  if  a  conclusion  could  not 
be  reached  which  would  be  accepted  by  everybody,  or  at 
least  by  a  majority  sufficient  to  establish  the  base  of  an 
international  system,  it  is  because  the  adoption  would 
result  necessarily,  for  several  large  States,  in  a  radical 
change  of  their  monetary  legislation. 

u  That  is,  in  truth,  a  difficult  undertaking.  Peoples 
already  far  advanced  in  civilization  have  habits,  customs 


59 

and  laws  which  are  adapted  to  their  traditions.  They 
are  not  applied  in  an  arbitrary  fashion ;  they  are  bound 
up  with  the  very  conditions  of  the  existence  of  these 
peoples. 

u  Despite  all  the  demonstrations  and  the  speeches,  all 
the  publications,  and  all  the  newspaper  articles,  do  we 
see  the  Powers  named,  and,  too,  others,  change  their 
Opinion  ?  NOT  THE  LEAST  IN  THE  WORLD. 

"  Since  the  first  day,  we  have  heard  upon  this  point 
declarations  which  were  perfectly  frank  and  sincere, 
declarations  for  which  I,  on  my  part,  am  grateful  to 
their  authors,  because  it  is  well  to  know  upon  what  we 
may  rely.  We  have  heard  the  Minister  of  Germany, 
and  the  Minister  of  Austro-Hungary,  and  then  Sir 
Rivers  Wilson,  declare  that  neither  Germany  nor 
Austro-Hungary  nor  England  had  any  intention  of 
modifying  their  monetary  systems,  with  which  they 
declared  themselves  fully  satisfied.  Under  these  con- 
ditions we  evidently  cannot  re-establish  free  coinage, 
and  I  have  not  the  vanity  to  believe  that  I  should  suc- 
ceed in  persuading  the  governments  of  these  great 
countries,  and  their  eminent  representatives,  that  they 
are  mistaken,  that  they  have  taken  the  wrong  road,  and 
that  they  are  in  error  in  remaining  attached  to  gold 
monometallism.  I  consider,  therefore,  until  some 
change  takes  place,  that  the  question  of  free  coinage  is 
decided  so  far  as  we  are  concerned." 

Said  Mr.  Currie,  for  Great  Britain  : 

"  After  the  repeated  declarations  of  the  delegates  of 
France,  Germany  and  Great  Britain,  we  should  only 
delude  ourselves  if  we  did  not  admit  that  the  question 
is  closed." 

After  the  Brussels  Convention,  the  German  Agricul- 
turists, deluded  into  the  belief  that  bimetallism  might 
raise  the  price  of  grain,  induced  the  Government  to 


6o 

appoint  a  Commission  on  the  subject,  and  the  Commis- 
sion has  reported  that  it  is  not  possible  to  raise  the 
price  of  silver  by  international  agreement.  After 
twenty-one  sessions  the  President  closed  the  proceed- 
ings with  the  single  remark  that  these  protracted 
debates  might  be  useful  as  showing  how  difficult  it  was  to 
find  something  which  would  evidently  be  desirable  if  it 
were  attainable. 

On  the  present  status  of  the  movement  let  me  put  in 
evidence  M.  Paul  Leroy  Beaulieu,  in  The  Forum  for 
December,  1895: 

"  To-day  a  fixed  ratio  between  gold  and  silver,  and 
equality  in  monetary  function  between  the  two  metals, 
is  an  arrangement  long  since  vanished.  It  seems  an 
antiquated  institution,  abandoned  for  a  quarter  of  a  cen- 
tury. Any  restoration  becomes  more  difficult  with  the 
passage  of  time.  Such  is  the  fate  of  silver, — a  de- 
throned monarch.  In  1876,  in  1880,  in  1885,  even  in 
1890,  though  far  less  at  the  later  dates,  there  were 
people  disposed  to  maintain  it  in  its  former  functions, 
or  to  restore  those  functions  when  they  had  been  only 
recently  lost.  But  to-day  an  entire  new  generation  oi 
adults  has  arisen  who  never  knew  silver  in  complete 
possession  of  the  functions  of  money. 

"There  is  not  a  single  European  country,  in  a  normal 
financial  condition,  that  attaches  the  slightest  impor- 
tance to  bimetallism,  From  time  to  time  some  Minis- 
ter utters  in  Parliament  a  few  equivocal  words  on  the 
subject,  seeking  to  avoid  stripping  the  bimetallists 
absolutely  of  all  hope.  But  America  must  not  be 
duped  by  these  ambiguous  expressions.  At  bottom  not 
a  country,  not  a  government  of  Europe,  has  the  least 
wish  to  make  the  least  change  in  the  established  mone- 
tary system,  that  is,  in  the  pre-eminence  of  gold,  and 
the  secondary  and  circumscribed  function  of  silver." 


6i 

As  there  were  proposals  as  early  as  the  beginning  of 
the  seventeenth  century,  or  really  the  closing  of  the 
sixteenth  century,  that  is,  three  hundred  years  ago, 
for  an  international  common  ratio,  we  can  see  from  the 
present  status  what  progress  the  theory  or  proposition 
for  international  bimetallism  has  made. 

Says  Mr.  Giffen  : 

"  After  so  much  bimetallic  clamor  as  we  have  suffered 
for  twenty  years,  sober  men  may  be  interested  to  see 
how  overwhelming  are  the  facts  and  the  economic 
opinion  against  the  biinetallist,  and  how  little  claim 
bimetallism  has  to  be  a  competing  monetary  theory 
with  gold  monometallism." 

Says  Prof.  W.  A.  Shaw  : 

"  The  verdict  of  history  on  the  great  problem  of  the 
nineteenth  century — bimetallism — is  clear  and  crush- 
ing and  final,  and  against  the  evidence  of  history  no 
gainsaying  of  theory  ought  for  a  moment  to  stand." 

To  conclude  this  part  of  my  subject  I  will  repeat: 

ist.  The  quantitative  theory  —  the  international 
bimetallists'  theory — is  without  the  slightest  founda- 
tion in  any  known  principle  of  economic  law,  and  is  a 
fallacy. 

2d.  That  the  economic  phenomena  of  the  past  fifty 
years  indicate  that  prices  of  commodities  move  in  obedi- 
ence to  natural  and  inherent  causes,  independent  of 
circulating  money  quantities. 

3d.  By  natural  law,  there  is  but  one  way  to  provide 
for  bimetallism  in  any  country,  and  that  is  to  make  the 
more  precious  metal  the  standard,  and  then  float  such 
an  amount  of  the  cheaper  metal  as  can  be  kept  upon 
an  undoubted  equality  through  free  interchangeability. 


"FREE   SILVER." 

ACCORDING  to  the  press  dispatches  of  February 
8th,  Representative  Hall  of  Missouri  charged  on 
the  floor  of  Congress  that  Senators  who  voted  for  free 
coinage  had,  according  to  "  credible  information/ 
privately  said  they  believed  free  coinage  would  bring 
upon  this  country  national  and  individual  bankruptcy 
and  ruin.  He  declared  that  the  greatest  sin  of  the 
present  age  was  the  cowardice  of  statesmen. 


We  have  shown  under  the  head  of  "  Bimetallism  " 
that  it  has  been  rejected  by  every  Western  power  of  any 
importance,  and  it  should  be  borne  in  mind  that  it  is 
not  claimed  by  any  prominent  advocates  of  that  theory, 
for  example,  Lavelleye  of  Belgium,  Cernuschi  of  France, 
Ahrendt  of  Germany,  Walras  of  Switzerland,  Seyd  (de- 
ceased) or  Gibbs  or  Helm  of  England,  or  Andrews  or 
Walker  of  the  United  States,  that  the  unrestricted  free 
coinage  of  silver  by  any  one  government  now  maintain- 
ing a  gold  standard  could  be  otherwise  than  disastrous. 
On  the  contrary,  they  declare  in  print  that  they  do  not 
desire  to  debase  the  standard  of  value  ;  they  would  have 
every  debt  paid  in  gold  or  its  equivalent.  And  this  is 
the  tone  of  bimetallists  generally  in  Great  Britain  and 
Continental  Europe.  To  all  of  which  I  repeat:  When 
the  two  money  metals  have  unlimited  free  coinage  at 


63 

fixed  ratios,  and  are  legal  tender,  the  cheaper  will, 
under  all  possible  circumstances,  drive  the  dearer  out  of 
circulation. 


We  now  come  to  the  present  most  aggravated  form 
of  the  silver  money  question, — its  independent,  un- 
limited free  coinage  by  the  United  States.  Alongside 
of  me  in  business  is  a  man  of  the  utmost  probity,  who 
regards  gold  and  silver  as  Siamese  twins,  and  in  effect 
says,  "  What  God  hath  joined  together  let  not  man  put 
asunder,"  though  the  commercial  relations  of  the  two 
metals  have  been,  since  the  dawn  of  history,  from  2  of 
silver  to  i  of  gold  to  34  of  silver  to  i  of  gold,  and  in 
the  past  three  hundred  years  France  alone  has  changed 
their  ratios  more  than  one  hundred  times  to  keep  this 
pair  of  celestials  in  double  harness.  Nevertheless,  this 
does  not  daunt  my  doughty  friend,  who  ascribes  all  the 
trouble  to  the  "  natural  cussedness  "  of  mankind,  the 
iniquitous  machinations  of  avaricious  goldbugs,  and 
simply  relies  upon  the  leaven  of  genuine  Christianity 
to  keep  the  discordant  couple  in  harmony.  He  finds 
Love  a  solvent  for  all  refractory  elements  in  life,  an 
ounce  of  which  he  maintains  in  his  philosophy  on  a 
parity  with  a  pound  of  knowledge,  that  is,  of  the 
scientific  methods  in  conformity  with  economic  law.  In 
support  of  his  doctrine  he  quotes  : 

"White  Honor's  haughty  champions  wait 

Till  all  their  scars  are  shown, 
Love  walks  unchallenged  through  the  gate 
And  sits  beside  the  throne." 

Recently  one  of  our  California  Congressmen  whom 
I  met,  after  saying  he  would  leave  in  a  few  days  for 


64 

Washington,  to  vote  for  the  unlimited  free  coinage  of 
silver,  volunteered  the  opinion  that  there  is  no  economic 
law  that  is  an  absolute  criterion  in  finance,  and  that  the 
people  are  bound  to  have  the  unlimited  free  coinage  of 
silver. 

It  is  very  certain  that  the  average  man  knows  far  less 
of  finance  and  the  laws  of  economic  science  than  he 
does  of  the  solar  system  and  astronomical  science ;  and 
natural  law  governs  economic  science  as  surely  as  it 
does  the  movements  of  the  planets.  Popular  clamor 
should  never  be  heeded  in  finance  any  more  than  in 
astronomy;  for,  as  we  have  already  shown  under  the 
"Natural  Law  of  Money"  and  "Bimetallism,"  all  his- 
tory proves  that  economic  law  operates  with  as  much 
certainty  in  the  one  as  gravitation  does  in  the  other. 

Prof.  Nicholson  wisely  observes  : 

"  If  it  is  once  generally  believed  that  questions  of 
currency  can  be  decided  off-hand  by  popular  vote,  the 
way  becomes  open  for  great  national  calamities." 

As  indicating  the  views  of  the  free  silver  agitators,  I 
quote  from  the  proceedings  of  a  Silver  Convention  in 
Iowa: 

"  The  demonetization  of  silver  was  a  colossal  con- 
spiracy and  crime,  the  greatest  ever  perpetrated  against 
the  human  family.  It  was  demoniac." 

Senator  Pfeffer  of  Kansas  declared  : 

"  It  matters  not  of  what  money  is  made,  or  what  its 
intrinsic  value  is.  What  gives  value  to  the  coins  is 
law,  nothing  else.  Our  dollars  ought  to  represent  our 
property,  all  that  we  have,  and  not  merely  the  little 


65 

gold  in  our  possession;  and  our  money  ought  to  be 
made  of  material  which,  in  small  bits,  would  have  no 
appreciable  market  value.  Then  it  would  not  be  (  cor- 
nered,' and  when  war  or  hard  times  should  come  it 
would  not  slink  away  and  hide.  When  the  people  need 
money,  they  ought  to  have  it  within  easy  reach." 

And  for  himself  and  constituents,  in  furtherance  of 
such  and  kindred  vagaries,  a  free  silver  Governor  of  a 
free  silver  State  said  that  they  would,  if  necessary,  ride 
in  blood  "  even  unto  the  horses'  bridles." 

Senator  Stewart  of  Nevada,  in  the  Overland  Monthly 
for  November,  says : 

"The  combination  which  wickedly,  dishonestly  and 
clandestinely  demonetized  silver  and  destroyed  one- 
half  of  the  metallic  money  of  the  world  dare  not  admit 
why  they  did  it  and  for  whose  benefit  it  was  done,  and 
that  it  is  supported  by  time-servers,  cringing  politicians, 
trembling  debtors,  office-holders  with  fixed  incomes,  and 
fawning  hypocrites  and  sycophants  of  every  name  and 


nature." 


The  Silver  party,  in  its  Convention  at  Washington, 
on  Thursday,  January  23d,  said  : 

u  The  fall  of  prices  has  destroyed  the  profits  of  legiti- 
mate industry,  injuring  the  producer  for  the  benefit  of 
the  nonproducer,  increasing  the  burden  of  the  debtor 
and  swelling  the  gains  of  the  creditor,  paralyzing  the 
productive  energies  of  the  American  people,  relegating 
to  idleness  vast  numbers  of  willing  workers,  sending 
the  shadows  of  despair  into  the  home  of  the  honest 
toiler,  and  building  up  colossal  fortunes  at  the  money 
centers." 

Only  a  few  weeks  ago  a  free  silver  Senator  from 
South  Carolina  denounced  the  President  of  the  United 


66 

States  as  a  besotted  tyrant,  declaiming  on  the  floor  of 
the  Senate  to  this  effect : 

"  The  derangement  in  our  financial  affairs  and  all 
this  cry  about  sound  money  and  maintaining  the  honor 
and  credit  of  the  United  States  are  all  part  and  parcel 
of  a  damnable  scheme  of  robbery,  which  has  for  its 
object:  first,  the  utter  destruction  of  silver  as  a  money 
metal ;  second,  the  increase  of  the  public  debt,  the  issue 
of  bonds  payable  in  gold ;  and  third,  the  surrender  to 
corporations  of  the  power  to  issue  all  paper  money  and 
give  them  a  monopoly  of  that  function." 

In  a  debate  in  the  United  States  Senate,  January  30, 
1896,  Senator  Mitchell  of  Oregon  said: 

u  We  must  legislate  to  increase  the  value  of  our 
export  commodities  (including  silver)  so  as  to  enable  us 
to  meet,  reduce,  and,  if  possible,  wipe  out  the  debt  which 
to-day  makes  the  people  of  this  country  virtually  slaves 
to  the  money-lenders  of  Great  Britain." 

Irving  M.  Scott  says,  in  the  Overland  Monthly  for 
February : 

u  Not  only  have  the  demonetizing  acts  with  respect 
to  silver  reduced  the  world's  redemption  money  fully 
fifty  per  cent,  but  they  have  palsied  its  powers  of 
recuperation,  have  effected  a  scarcity  of  money,  and 
thereby  infested  our  country's  doors  with  countless 
packs  of  ravenous  wolves." 

Such  are  some  of  the  hysterical  utterances  of  the  finan- 
cial rough-riders  of  the  country  as  they  shout  their 
fallacious  doctrines  to  deluded  adherents.  The  folly 
of  the  free  silver  agitators  in  the  United  States  is  but 
another  form  of  the  "  whip-all-creation  "  braggadocio 
once  so  common  in  this  country,  but  none  the  less 
hurtful  and  deplorable  because  common.  To  all  of 


67 

which  I  have  repeatedly  remarked  in  the  past,  and 
now  reiterate,  that  if  the  Government  of  the  United 
States  can,  by  legal  enactment,  convert  a  given  quan- 
tity of  a  commodity  worth  only  fifty  cents  in  the 
world's  markets  into  one  dollar  of  money  of  per- 
manent value,  why  not  waive  the  fifty  cents'  worth  of 
intrinsic  value  and  issue  fiat  money  at  once  ?  If  law 
can  do  this,  why  not  make  gold  and  silver  equal  in 
value,  ounce  for  ounce  ?  If  this  can  be  done,  why 
levy  taxes  ?  The  doctrine  is,  in  fact,  that  of  the 
advocates  of  inconvertible  paper ;  only  the  latter  are 
more  logical.  If  Government  is  to  fix  prices  at  all, 
it  is,  of  course,  cheapest  and  easiest  to  go  to  incon- 
vertible paper  at  once.  The  perverted  views  in  ques- 
tion have  all  resulted  from  the  cheap-money  delusion 
which  has  made  the  United  States  monetary  system 
the  irregular  and  wasteful  patchwork  that  it  is.  To 
create  more  money  in  order  to  raise  prices  in  general 
has  been  the  object  of  one  faction,  while  another  has 
aimed  purely  and  directly  at  raising  the  price  of  silver. 
What  has  been  proposed  and  done,  therefore,  has 
tended  to  aggravate  monetary  evils  instead  of  lessen- 
ing them. 

Senator  Stewart  says,  "  They  dare  not  admit  why 
they  did  it  and  for  whose  benefit  it  was  done,"  namely, 
the  omission  of  the  silver  dollar  from  coinage, — that 
which  he  now  calls  "  the  crime  of  '73."  As  he  voted 
for  it,  I  will  put  him  in  evidence.  In  the  Senate, 
February,  1874,  Senator  Stewart,  replying  to  a  ques- 
tion from  Senator  Logan,  said  : 


68 

"  I  want  the  standard  gold,  and  no  paper  money  not 
redeemable  in  gold ;  no  paper  money  the  value  of 
which  is  not  ascertained  ;  no  paper  money  that  will 
organize  a  gold  board  to  speculate  in  it." 

The  "  gold  board "  referred  to  was  the  Gold  Ex- 
change in  New  York,  which  existed  during  the  sus- 
pension of  specie  payments.  Subsequently  Senator 
Logan,  in  discussing  the  same  subject,  stated  that  we 
could  not  get  gold  to  resume  specie  payments  with. 
To  which  Stewart  replied  : 

"  When  gold  is  invited  to  a  country  like  this,  with 
such  an  industrious  people  as  we  have,  with  our 
industry  and  our  resources,  I  say  there  will  be  no 
difficulty  about  getting  sufficient  gold." 

Since  those  words  were  spoken  the  annual  produc- 
tion of  gold  in  the  world  has  increased  120  per  cent. 

Senator  Stewart  also  says  : 

"  They  (the  advocates  of  a  gold  standard)  know  full 
well  that,  if  silver  had  the  same  right  of  mintage  with 
gold,  the  parity  between  the  two  metals  would  be  restored 
and  maintained,  as  it  was  for  thousands  of  years  pre- 
vious to  the  crime  of  1873" 

I  wonder  if  he  was  conscious  of  the  irony  of  his 
own  words  ?  There  never  has  been  maintained,  at  any 
place  or  period,  an  evenly  operating  parity  between  the 
two  metals  as  legal  tender  under  free  coinage  at  fixed 
ratios. 

He  also  asks : 

"  Does  anybody  doubt  that  Japan,  China,  Mexico,  and 
other  free  coinage  countries,  are  more  prosperous  and 
happy  than  ever  before  in  their  history  ?  while  every 


69 

gold-standard  country  in  the  world  is  more  miserable 
than  at  any  other  time  for  the  last  two  hundred  years  ?" 
I  have  taken  at  random  nine  callings,  as  follows, 
laborer,  bricklayer,  stonemason,  blacksmith,  driver, 
butcher,  shoemaker,  carpenter,  printer,  and  find  that  at 
present  their  aggregate  wages  for  one  day  in  San 
Francisco  are  $29.35  S°^  5  at  f°ur  Pacific  Coast  com- 
mercial centers,  combined  average,  $25.56  gold;  in 
commercial  centers  east  of  Missouri  River,  $22.17  gold; 
in  Mexico,  $8.17  in  silver;  in  China,  $3.25,  and  in 
Japan,  $2.19,  also  silver,  though  since  the  Chino- 
Japanese  war  wages  are  rising  in  China  as  well  as 
Japan.  McMasters  quotes  the  same  number  and  calling 
of  workmen  in  New  York  as  earning,  in  the  period 
between  1770-1800,  for  one  day,  $7.35  in  silver. 
Thomas  Carlyle,  in  his  "  Past  and  Present,"  quaintly 
records  that  Milton  received  for  his  "  Paradise  Lost," 
and  other  works,  ^10  in  installments  and  a  narrow 
escape  from  hanging.  And  Bishop  Latimer,  in  one  of 
his  sermons,  shows  that  in  his  time  £%  was  not  infre- 
quently the  yearly  wage  of  a  parish  priest,  which  he 
very  justly  denounced  as  niggardly.  In  money  of  the 
present  time  it  would  be  only  about  $10. 

The  average  wage-earner  in  Japan  or  China  gets  no 
more  in  silver  than  one-eighth  the  rate  obtained  in 
this  country  in  gold,  and  in  Mexico,  right  alongside  of 
us,  as  a  rule  no  more  in  silver  than  one-third  the  rate 
received  in  this  country  in  gold.  I  also  refer  to  the 
labor  statistics  quoted  under  "  Bimetallism." 

Senator  Stewart  says,  "  One-half  the  metallic  money 
of  the  world  has  been  destroyed."  Mr.  Scott  says, 
u  Reduced  the  world's  redemption  money  50  per  cent  " 


70 

There  never  has  been  any  destruction  of  or  reduction 
in  the  amount  of  silver  money.  On  the  contrary,  it 
has  increased  over  75  per  cent  in  45  years.  Taking 
Mulhall's  figures  for  1860,  $4,000,000,000,  and  1890, 
$7,973,000,000,  as  a  basis,  and  adding  the  total  prod- 
uct, mint  ratios,  1891-95  inclusive,  and  deducting 
from  these  five  years  40  per  cent  for  the  arts,  the 
amount  of  gold  and  silver  money  would  now  be 
approximately  $9,100,000,000,  or  an  increase  of  134 
per  cent  since  1860.  But  taking  other  figures,  in 
1860  the  world's  total  stock  of  coin,  estimated,  was 
$4,000,000,000 ;  in  1895,  as  per  United  States  Mint 
Report,  $8,157,000,000;  and  the  present  stock  of  metal- 
lic money  exceeds  $8,200,000,000,  an  increase  of  105 
per  cent  in  45  years.  This  money  is  divided  at  the 
present  time:  Gold,  $4,130,000,000;  silver,  $4,070,- 
000,000. 

Four  thousand  and  seventy  millions  of  dollars  is 
the  mint  value  of  the  silver  money  in  the  world,  its 
commercial  value  being  approximately  sixty-five  cents 
per  ounce;  and  nearly  half  of  it  represents  silver 
monometallism  in  Oriental  lands.  Does  any  sane 
man  believe  that  unlimited  free  coinage  by  the  United 
States  of  America  would  increase  the  market  value  of 
this  mass  of  silver  two  thousand  millions  of  dollars  ? 
Although  eighty-five  per  cent  of  the  total  is  full  tender, 
it  possesses,  practically  speaking,  no  more  commodity 
value  in  one  place  than  another,  as  compared  with 
gold,  because,  in  the  relations  between  gold  and  silver 
in  India,  China,  Japan  and  Mexico,  silver  is  subject  to 
practically  the  same  commodity  price  that  it  would  be 
with  us.  Throughout  the  whole  history  of  the  subject, 


71 

whatever  ma}^  have  been  the  legal  ratio  enacted  between 
gold  and  silver  coins,  gold  and  silver  themselves  have 
always  had  a  commodity  value  independent  of  these 
ratios ;  and  this  commodity  value  invariably  controlled 
the  purchasing  power  of  each  money  under  unlimited 
free  coinage  of  both  metals.  In  all  large  transactions 
of  ancient  or  medieval  times,  the  settlement  of  obliga- 
tions was  in  either  gold  or  silver  by  weight  (as  it 
is  now  in  China),  and  without  reference  to  coinage 
ratios,  which  were  variable  and  constantly  set  at  naught 
by  the  commercial  status  of  the  metals,  that  is,  by  the 
will  of  the  people, — the  supply  and  demand. 

However,  so  far  as  the  world's  stock  of  silver  is  con- 
cerned, it  is  only  when  it  is  employed  in  international 
exchanges  or  in  the  industrial  arts  that  it  is  estimated 
at  its  bullion  value  in  gold  and  subjected  to  a  discount. 
In  all  countries  where  it  is  the  legal  standard,  as  well 
as  in  countries  that  have  a  so-called  "limping"  stan- 
dard, like  the  United  States  and  the  States  of  the  Latin 
Union,  it  circulates  as  money  at  its  full  legal  parity 
with  gold  and  to  the  extent  of  $630,000,000,  which 
represents  the  subsidiary  silver  in  circulation,  is  cur- 
rent at  nearly  seven  per  cent  more  than  its  bullion 
value  in  standard  silver  coins. 

Of  the  $4,070,000,000  silver  in  circulation,  according 
to  the  Mint  Director's  last  report,  $1,900,000,000,  or 
nearly  one-half,  is  held  in  Oriental  countries,  where  it 
is  the  "  standard  of  value,"  and  hence  cannot  be  at  a 
discount  in  the  domestic  commerce  of  those  countries ; 
while  over  $1,720,000,000  is  held  by  the  United  States, 
the  Latin  Union,  Germany,  Spain  and  Great  Britain, 


72 

all  of  which  circulates  at  its  full  parity  with  gold.  At 
no  period  in  history  has  there  ever  been  such  a  vast 
volume  of  silver  coin  performing  the  functions  of 
money.  And,  as  proof  of  this,  while  the  world's 
produce  of  silver  since  1873,  when  its  alleged  demon- 
etization occurred,  has  been  $2,754,452,900,  its  coinage 
has  been  $2,756,423,015.  This,  of  course,  includes 
recoinage.  Moreover,  it  has  been  persistently  asserted 
by  leading  bimetallists  that  silver  has  not  depreciated, 
and  will  buy  as  much  now  as  it  ever  could.  And,  to 
demonstrate  that  proposition,  we  have  been  treated  to 
an  amount  of  arithmetical  jugglery  that  might  well 
make  Hermann,  prince  of  prestidigitators,  or  even  an 
Indian  fakir,  turn  green  with  envy. 

To  merely  touch  upon  Mr.  Scott's  assertion  regarding 
what  he  deems  reduction  by  reason  of  the  gold  standard, 
I  may  say  that  we  find,  upon  reference  to  authorities, 
that  the  production  of  gold  (I  am  now  speaking  of  gold 
and  silver  as  commodities)  was,  in  1874,  $91,000,000; 
in  1876,  $104,000,000;  in  1878,  $119,000,000;  in  1890, 
$120,000,000;  in  1892,  $147,000,000;  in  1894,  $180,000,- 
ooo;  and  in  1895,  breaking  all  previous  records,  it  was 
$200,000,000. 

Silver  represented,  in  1870,  $51,000,000;  in  1874, 
$70,000,000;  in  1884,  $91,000,000;  in  1894,  $106,- 
000,000;  in  1895,  $110,000,000;  wherefore,  I  repeat, 
there  has  never  been  any  destruction  of  or  reduction  in 
the  volume  of  silver  money. 

As  Mr.  Scott  practically  advises  this  country  to 
abandon  the  gold  standard  and  adopt  the  unlimited  free 
coinage  of  silver,  presumably  at  a  ratio  of  16  to  i, 


73 

which  is  about  twice  its  actual  value,  and  which  means 
cheap-silver  monometallism, — I  would  ask  what  effect 
such  a  policy  would  have  upon  the  welfare  of  the  men 
whom  he  employs,  and  also  upon  that  of  the  people  of 
California  whose  gains  and  earnings  are  represented  by 
the  hundred  and  seventy-five  millions  of  deposits  on  a 
gold  basis  in  the  savings  and  commercial  banks  of  this 
State  ?  In  other  words,  does  he,  or  does  any  one,  really 
believe  that  his  workmen,  or  anybody's  workmen,  or 
the  people  at  large,  would  be  benefited  by  being  paid 
their  wages,  or  their  deposits  in  banks,  on  a  depreciated 
silver  basis,  instead  of  a  gold  basis,  as  now  ? 

In  the  Elizabethan  reformation  of  the  English  coin- 
age under  Sir  Thomas  Gresham  in  the  sixteenth 
century,  the  Queen,  in  her  proclamation,  said :  "  The 
loss  in  the  base  money  falls  principally  on  pensioners, 
soldiers,  hired  servants,  and  all  other  poor  people  who 
live  by  any  kind  of  wages,  and  not  by  rents  of  land  or 
trade  or  merchandise."  This  is  in  accordance  with  a 
natural  law  as  inexorable  as  gravitation,  that  no  legis- 
lation can  evade  or  set  aside. 

The  way  in  which  the  subject  of  free  silver  coinage  is 
discussed  by  many  of  its  advocates  would,  without 
disrespect,  suggest  that  they  expected  to  be  able  to  go 
forth  with  a  sack  and  obtain  money  for  nothing ;  but 
there  is  no  royal  road  to  wealth,  and  all  should  consider 
the  evils  that  would  result  to  the  industrial  classes  of 
this  country  from  the  substitution  of  a  currency  based 
on  silver  instead  of  gold. 

Every  person  should  candidly  reflect  upon  the  indus- 
trial condition  and  wage-earning  opportunities  of  human 


74 

kind  in  silver-standard  countries  as  compared  with  the 
gold-standard  countries.  It  is  only  in  the  gold-standard 
countries  that  high  wages  have  been  achieved.  Every 
country  in  the  world  that  has  unrestricted  free  coinage 
is  on  a  silver  basis,  and  low  wages  prevail.  There  is 
not  a  gold-standard  country  in  the  world  that  does  not 
use  silver  as  auxiliary ;  but  there  is  no  silver-standard 
country  that  does  or  can  use  gold  as  auxiliary,  except 
by  specific  contract  or  as  hoarded  treasure. 

Why  any  considerable  portion  of  the  American 
people  should  have  believed,  or  can  now  believe,  that 
the  unrestricted  free  coinage  of  silver  could  possibly  be 
a  benefit,  or  that  silver  and  silver-producers  should  be 
deemed  entitled  to  any  more  consideration  than  wheat 
and  cotton  and  the  men  that  plant  and  cultivate  them, 
is  simply  astonishing. 

Professor  Andrews  stands  aghast  at  the  idea  of  social- 
ism,— speaking  of  anarchism,  nihilism  and  socialism  in 
the  same  breath  as  corelated, — thus : 

"  That  labor  is  the  sole  cause  of  wealth,  and  that 
things  are  wealth  exactly  in  proportion  as  they  embody 
labor,  is  a  fundamental  tenet  of  socialism,  anarchism 
and  communism,  the  admission  of  which  leaves  one  no 
logical  defense  against  the  general  doctrine  of  those 
people." 

Yet,  "  doing  something  for  silver  "  is  class  socialism 
as  pernicious  in  effect  as  that  of  the  greenback  legisla- 
tion, which  is  probably  one  of  the  most  aggravating 
examples  known  in  this  country  of  home  markets  that  do 
not  qualify  for  the  farmer  when  his  products  are  brought 
into  competition  in  the  world's  markets — which  fix 


75 

home  prices — with  the  products  of  Argentine  peons, 
Indian  ryots  and  Russian  peasants. 

The  alleged  popular  desire  for  free  coinage,  upon 
which  so  much  stress  has  been  laid,  is  presumably  based 
on  a  belief  in  the  public  mind  that  silver,  given  free 
scope,  would  cure  or  at  least  mitigate  industrial  depres- 
sion, caused,  as  alleged,  by  scarcity  of  money ;  and  that 
it  would  contribute  largely  to  the  relief  of  farm  mortgage 
or  note  debtors,  both  of  which  are  points  upon  which 
the  advocates  of  free  silver  also  place  especial  emphasis. 
An  advocate  of  free  silver  has  said : 

"  It  is  not  a  question  of  interest  to  the  people  whether 
the  gold  and  silver  bullion  owners  may  have  the  right 
to  have  their  metal  coined  into  legal-tender  dollars,  but 
it  is  of  vital  interest  that  those  who  carry  the  burden 
of  $2,500,000,000  of  debts  that  are  liens  on  their 
property  shall  have  the  right  to  the  use  of  both  metals 
for  legal-tender  money  to  pay  those  vast  debts." 

The  question  arises,  Would  even  they  be  helped  under 
the  independent,  unlimited  free  coinage  of  silver? 
Any  one  possessing  silver  bullion  would  have  the  same 
coined,  because  of  the  artificial  value  placed  upon  it  by 
Government,  and  use  it  to  his  own  advantage.  How 
would  farmers  with  mortgaged  farms  obtain  such  silver 
but  by  exchanging  their  commodities  for  it,  or  by 
executing  fresh  mortgages?  When  asked  how  they 
are  to  get  possession  of  a  more  plentiful  supply  of 
money,  if  on  a  free  silver  basis  it  should  be  more  plen- 
tiful, they  cannot  tell.  That  our  wheat  farmers  have 
suffered  extremely  admits  of  no  doubt.  In  addition  to 
drought  and  other  climatic  vicissitudes,  they  have 


76 

suffered  from  the  competition  of  India,  Argentina  and 
Russia,  thereby  demonstrating  the  fallacy  of  the  home- 
market  delusion;  and,  latterly,  cable  and  trolley  cars 
and  the  bicycle  have  come  in  to  lower  the  prices  of  their 
horses  and  lessen  the  demand  for  feed  grains,  etc.  But 
how  would  a  depreciated  currency,  such  as  would  be 
produced  by  the  unrestricted  free  coinage  of  silver, 
help  them?  In  California  their  obligations  are  in 
terms  of  gold.  In  any  event  contraction  and  panic 
would  be  the  first  result  of  a  change,  because  gold 
would  be  driven  out  of  circulation.  Moreover,  gold 
has  by  law  been  the  standard  for  twenty-three  years, 
a  period  of  time  long  enough  to  permit  six  generations 
of  ordinary  farm  or  land  mortgages  to  expire  by  limita- 
tion, the  average  life  of  such  mortgages  being  less  than 
four  years. 

Debtors  might  avail  themselves  of  a  free-coinage  law 
to  pay  their  debts  in  cheaper  money  if  their  creditors 
should  not  be  alert  enough  for  them ;  but  capitalists 
will  be  equal  to  the  situation  as  regards  future  bar- 
gains, for  by  universal  consent  commercial  communities 
may  by  contract  free  themselves  from  the  burdens  of 
such  an  act.  The  gold  standard  was,  in  fact,  brought 
into  use  in  England  180  years  ago  by  the  community 
contracting  in  this  manner,  and  the  experience  on  the 
Pacific  Coast,  as  well  as  in  England  and  elsewhere, 
shows  that  the  commercial  community  is  everywhere 
ready  enough  to  use  other  than  an  enforced  money  if 
they  do  not  quite  like  it. 

But  there  would  be  no  protection  whatsoever  for  the 
wage-earner  of  any  kind.  He  would  be  as  a  lamb  led  to 


77 

the  slaughter.  The  shopkeeper  who  sells  goods,  and 
the  capitalist  who  rents  houses  or  lands,  can  raise  the 
prices  thereof  by  their  own  volition ;  but  the  workman 
who  buys  goods  and  rents  houses  or  lands  cannot  simi- 
larly raise  his  own  wages.  Of  all  the  contrivances  for 
cheating  the  laboring  classes  of  mankind,  none  is  more 
effectual  than  a  currency  that  is  not  convertible  into 
metallic  money  of  intrinsic  equivalency.  In  this 
country  to-day  the  laboring  man  receives  a  dollar 
equal  to  gold  worth  100  cents,  but  with  silver  dollars 
of  independent,  unlimited  free  coinage  he  would  be 
cheated  of  one-half  of  his  dollar.  Free  silver  coinage 
practically  means  cheating  creditors  out  of  one-half 
their  dues.  The  adoption  of  free  silver  means  silver 
monometallism,  with  silver  coin  depreciated  one-half. 
The  maintaining  of  both  metals  as  money  should  be 
such  that  each  should  equal  the  other.  That  would  be 
true  bimetallism,  and  is  only  possible  with  gold  as  the 
standard  and  silver  as  auxiliary  freely  interchangeable. 
It  is  frequently  asserted  by  advocates  of  the  indepen- 
dent, unlimited  free  coinage  of  silver  by  the  United 
States  Government,  that  the  prices  of  commodities, 
particularly  wheat,  have  steadily  moved  in  sympathy 
with  the  price  of  silver.  An  examination  of  this  sub- 
ject has  shown  that  within  the  past  twenty-three  years 
the  fluctuations,  for  example,  in  wheat,  corn  and  cotton, 
have  almost  invariably  occurred  because  of  an  increase 
or  a  decrease  in  the  world's  supply ;  that  is  to  say, 
when  the  crops  were  light,  prices  increased,  and,  when 
crops  were  heavy,  prices  decreased ; — beef  and  pork  fol- 
lowing the  fortunes  of  the  cereals  to  a  less  degree ; — and 


78 

such  fluctuations  show  continuously  throughout  the 
period  named,  to  wit,  twenty-three  years,  from  1873  to 
1895  inclusive,  with  no  indication  that  the  changes  in 
prices  were  caused  or  governed  by  silver  quotations  in 
any  way.  In  other  words,  the  general  downward  ten- 
dency in  the  price  of  wheat  has  been  due  mainly  to  the 
increased  product,  for  export,  in  Argentina,  India, 
Russia  and  the  United  States  also.  Let  us  take  the 
coffee  crop,  almost  entirely  confined  to  silver-using 
countries,  and  of  the  present  value  of  $250,000,000  per 
annum.  It  has  doubled  in  quantity  since  1870,  yet  the 
demand  has  at  the  same  time  so  increased  that  the 
price  is  now  approximately  18  cents  per  pound  in  gold, 
as  against  an  average  of  less  than  n  cents  for  five 
years,  from  1856  to  1860,  an  increase  of  66  per  cent. 
Cotton  varied  77  per  cent  in  1895.  Wheat  declined  in 
eighteen  years  —  that  is,  from  1879  (date  of  gold 
resumption)  to  1896 — 45  per  cent ;  corn  15  per  cent ; 
oats  15  per  cent;  lard  3  per  cent ;  mess  pork  increased 
3  per  cent ;  butchers'  beef  13  per  cent, — a  superficial 
average  decline  on  these  six  articles  of  1 1  per  cent ; 
while  we  have  shown  under  "  Bimetallism  "  that  in  the 
same  period  transportation  of  all  kinds  and  manufac- 
tures generally  declined  over  50  per  cent,  which  must 
surely  be  deemed  a  blessing,  particularly  as  wages 
increased  during  the  same  period.  What  the  explana- 
tion is  of  this  situation  is  given  in  Professor  Marshall's 
"  Principles  of  Economics  :  "  "  A  rise  in  the  efficiency 
of  any  one  group  of  workers  may  tend  to  glut  the  mar- 
ket with  their  wares,  but  a  general  increase  in  the 
efficiency  of  all  workers  would  increase  the  national 


79 

dividend  and  raise  earnings  nearly  in  proportion." 
This,  I  think,  fairly  accounts  for  the  fact  that  wages 
have  in  the  aggregate  largely  increased  during  this 
century,  while  as  a  whole  prices  of  commodities  have 
fallen,  but  not  nearly  so  much  as  the  general  outcry 
would  indicate,  as  can  be  seen  from  the  following  table 
from  Schoenhof  's  "  Money  and  Prices  :  " 

Variation  of  Prices  and  Approximating  Totals  of  Index  Numbers. 

1845-50.  1879.  1884.  1888. 

1.  Coffee 100  140  106  166 

2.  Sugar 100  55  54  49 

3.  Tea 100  in  92  64 

4.  Tobacco 100  156  200  244 

5.  Wheat 100  75  73  58 

6.  Butchers'  meat 100  127  123  108 

7.  Cotton 100  73  92  90 

8.  Raw  silk 100  113  117  117 

9.  Flax  and  hemp 100  80  76  66 

10.  Sheep's  wool 100  107  98  in 

11.  Indigo 100  164  151  129 

12.  Oils 100  104  no  74 

13.  Timber 100  115  100  80 

14.  Tallow 100  83  113  73 

15.  Leather 100  146  139  133 

16.  Copper 100  72  71  91 

17.  Iron loo  77  69  67 

1 8.  Lead 100  84  70  90 

19.  Tin 100  77  104  173 

20.  Cotton,  Pernambuco.  .    .  100  71  74  70 

21.  Cotton  yarn 100  88  99  90 

22.  Cotton  cloth 100  81  88  87 

Totals  of  index  numbers  .  .2,200        2,202         2,221         2,230 
Price  of  silver  per  ounce  .    .  6o>^d.       49 /^d.         5 id. 


8o 

Thus  in  a  period  of  forty  years, — 1845-50  to  1889,— 
considering  the  prices  of  commodities,  we  find  the  fol- 
lowing advances: 

Butchers'  meat 8  per  cent. 

Raw  silk 17 

Indigo 29  " 

Leather 33  " 

Cofiee ; 66  " 

Tin 73  " 

Tobacco  (internal  revenue  tax) 144  " 

The  cry  of  distress  has  been  chiefly  because  of  wheat 
and  cotton.  If,  during  an  average  of  eighteen  years, 
the  fall  in  silver  caused  wheat  and  cotton  to  fall,  why 
did  it  not  cause  coffee,  tobacco,  beef,  mess  pork,  lard, 
etc.,  to  fall?  In  the  year  1895,  as  stated,  cotton  varied 
from  5.28  to  9.38  per  pound,  or  77  per  cent,  and  coffee 
was  higher  from  1890-95  than  it  had  been  for  twenty 
years  preceding,  the  average  being  18  cents  per  pound 
for  the  six  years  named.  Why?  Because  of  a  steadily 
increased  demand  for  it. 

Let  us  now  consider  the  side  of  the  creditor.  There 
are  in  the  United  States  due  or  pending  from  savings 
banks,  building  and  loan  associations,  and  life  and  fire 
insurance  companies,  several  thousand  million  dollars, 
to  say  nothing  of  railroad  and  other  corporation  stocks 
and  bonds.  There  are  18,000,000  wage- workers 
whose  earnings,  let  us  say  at  $400  each,  yield  them 
$7,200,000,000  per  annum.  Think  of  the  hardships 
that  through  these  immense  interests  would  be  pressed 
upon  the  working  people  by  a  change  to  the  free  coin- 
age of  silver, — a  50  per  cent  reduction  in  the  standard 
of  measure  and  capital  valuations. 


.-.  .-    .    . 

ol  ov  ,     >' 

In  the  monetary  inquiry  of  Great  Britain  in  1381, 
Richard  Aylesbury  is  reported  to  have  said : 

"  The  agreement  of  the  gold  with  the  silver  could 
not  be  effected  unless  the  money  were  changed;  but 
that  he  dared  not  propose,  on  account  of  the  general 
damage  which  would  ensue." 

In  1830,  when  France,  Germany,  the  United  States, 
etc.,  were  on  a  silver  basis,  a  Mr.  Atwood  introduced  a 
bill  into  Parliament  to  have  silver — which,  as  compared 
with  gold,  was  then  at  a  discount  of  5  per  cent  in 
England — invested  with  full  money  functions  for  the 
payment  of  all  obligations,  to  which  Mr.  Herries,  Master 
of  the  Mint,  replied,  conclusively,  that  it  would  mean 
general  bankruptcy:  ist,  by  demand  for  payment  of 
debts  in  gold  before  silver  became  effective;  2d,  by 
change  of  capital  valuations  to  a  silver  basis.  Sir 
Robert  Peel  also  said  it  would  mean  general  bank- 
ruptcy. 

If  5  per  cent  depreciation  would  approximately  occa- 
sion such  results  in  England,  what  would  50  per  cent 
do  in  the  United  States  ? 

I  take  the  liberty  of  quoting  from  John  Locke  one  of 
several  quaint  and  simple  illustrations  which  he  gave, 
in  answer  to  a  proposition  from  Secretary  Lowndes  of 
the  British  Treasury  to  increase  the  denominational 
value  of  a  crown,  and  I  trust  my  hearers  will  observe 
how  aptly  it  applies  to  the  artless  theories  of  the  silver 
agitators.  Said  Mr.  Locke: 

"  The  multiplying  arbitrary  denominations  will  no 
more  supply  nor  in  any  ways  make  our  scarcity  of  coin 
commensurate  to  the  need  there  is  of  it,  than  if  the 


82 

cloth  which  was  provided  for  clothing  the  army,  falling 
short,  one  should  hope  to  make  it  commensurate  to  that 
need  there  is  of  it  by  measuring  it  by  a  yard  one  foot 
shorter  than  the  standard,  or  changing  the  standard  of 
a  yard,  and  so  getting  the  full  denominations  of  yards 
necessary  according  to  the  present  measure.  For  this 
is  all  that  will  be  done  by  raising  our  coin  as  is  pro- 
posed. All  that  it  amounts  to  is  no  more  than  this, 
viz,  that  each  piece,  and  consequently  our  whole  stock 
of  money,  should  be  measured  and  denominated  by  a 
penny  one-fifth  less  than  the  standard. 

"  The  increase  of  denomination  does  or  can  do  noth- 
ing in  the  case,  for  it  is  metal  by  its  quantity  and  not 
denomination  that  is  the  price  of  things  and  measure  of 
commerce;  and  it  is  the  weight  of  metal  in  it,  and  not 
the  name  of  the  pieces,  that  men  estimate  commodities  by 
and  exchange  them  for. 

"  If  this  be  not  so,  when  the  necessity  of  our  affairs 
abroad,  or  ill-husbandry  at  home,  has  carried  away  half 
our  treasure,  and  a  moiety  of  our  money  is  gone  out 
of  England,  it  is  but  to  issue  a  proclamation  that  a 
penny  shall  go  for  twopence,  sixpence  for  a  shilling, 
half  a  crown  for  a  crown,  etc.,  and  immediately,  without 
any  more  ado,  we  are  as  rich  as  before;  and,  when  half 
the  remainder  is  gone,  it  is  but  doing  the  same  thing 
again,  and  raising  the  denomination  anew,  and  we  are 
where  we  were,  and  so  on." 

Lord  Macaulay,  reciting  the  events  of  the  luckless 
"  administration  "  in  Ireland  of  King  James  the  Second, 
in  1689, says : 

"The  poverty  of  the  treasury  was  the  necessary 
effect  of  the  poverty  of  the  country.  Public  prosperity 
could  be  restored  only  by  the  restoration  of  private 
prosperity ;  and  private  prosperity  could  be  restored 


§3 

only  by  years  of  peace  and  security.  James  was  absurd 
enough  to  imagine  that  there  was  a  more  speedy  and 
efficacious  remedy.  He  could,  he  conceived,  at  once 
extricate  himself  from  his  financial  difficulties  by  the 
simple  process  of  calling  a  farthing  a  shilling.  The 
right  of  coining  was  undoubtedly  a  flower  of  the  pre- 
rogative ;  and,  in  his  view,  the  right  of  coining  included 
the  right  of  debasing  the  coin.  Pots,  pans,  knockers 
of  doors,  pieces  of  ordnance  which  had  long  been  past 
use,  were  carried  to  the  mint.  In  a  short  time  lumps  of 
base  metal,  nominally  worth  near  a  million  sterling, 
intrinsically  worth  about  a  sixtieth  part  of  that  sum, 
were  in  circulation.  A  royal  edict  declared  these  pieces 
to  be  legal  tender  in  all  cases  whatever.  A  mortgage 
for  ^1,000  was  cleared  off  by  a  bag  of  counters  made 
out  of  old  kettles." 

In  discussing  monetary  matters,  Thomas  Jefferson 
said,  as  all  the  world's  statesmen  have  said  before  and 
since,  that  the  question  of  the  difference  between  the 
value  of  gold  and  silver  as  money  was  purely  a  com- 
mercial question.  It  did  not  depend  on  legislation,  or 
the  fancy  and  taste  of  men,  but  on  commerce,  which 
regulates  the  price  of  commodities,  and  that  "  the  whole 
art  of  government  consists  in  the  art  of  being  honest." 

Every  attempt  to  enforce  the  acceptance  by  a  free 
people  of  a  depreciated  and  practically  fiat  currency  has 
failed  eventually,  even  in  times  of  war,  and  generally 
then  before  the  close  of  the  wars.  It  is  unnecessary  to 
cite  more  examples,  though  there  have  been  striking 
ones,  especially  in  France  and  the  United  States  within 
the  past  200  years,  and  elsewhere  throughout  the  world 
in  all  times ;  and  it  is  Government  fiat  alone  that  is 
depended  upon  by  the  advocates  of  the  independent, 


84 

unlimited  free  coinage  of  silver  in  the  United  States  to 
make  it  go  at  $1.2929  per  ounce  as  money.  Its  most 
vociferous  spokesmen  assert  this  vehemently.  That 
this  country  should  be  kept  in  a  state  of  continual  sus- 
pense and  incipient  panic  because  of  a  product  that  is 
probably  not  the  equal  in  commercial  value  of  turnips 
or  carrots,  certainly  not  of  potatoes  or  eggs,  and  which, 
expressed  in  figures,  constitutes  much  less  than  one  per 
cent  of  the  country's  product,  is  something  amazing. 

The  agitation  of  the  silver  question,  aggravated  by 
"  Coin's  Financial  School,"  is  one  of  those  hallucina- 
tions that  have  occurred  from  time  to  time  in  this  coun- 
try and  elsewhere,  but  particularly  in  this  country  for 
the  last  twenty-five  years,  working  incalculable  evil,  as 
all  monetary  schemes  of  like  nature  always  and  every- 
where have  done.  Mr.  Harvey's  arguments  do  not 
contain  a  single  valid  reason  or  suggestion  why  this 
country  should  engage  in  a  free-silver  crusade, — should 
depart  from  a  sound-money  basis ;  and,  when  I  use  the 
term  sound  money,  I  mean  money  redeemable  in  coin 
of  intrinsic  equivalency,  or,  in  other  words,  a  dollar  that 
is  worth  a  dollar  the  world  over.  An  American  gold 
dollar,  if  melted,  will  yield  a  dollar's  worth  of  gold 
anywhere. 

The  following  is  the  dernier  resort  offered  by  Mr. 
Harvey  in  his  "  Coin's  Financial  School  "  for  sustain- 
ing the  independent,  unlimited  free  coinage  of  silver 
by  the  United  States  of  America  : 

"If  it  is  claimed  we  must  adopt  for  our  money  the 
metal  England  selects,  and  can  have  no  independent 
choice  in  the  matter,  let  us  make  the  test  and  find  out 


85 

if  it  is  true.  If  it  is  true,  let  us  attach  England  to  the 
United  States,  and  blot  her  name  out  from  among  the 
nations  of  the  earth." 

Such  folly  as  this  would  seem  to  require  no  comment, 
but  Mr.  Harvey  is  not  alone  in  it.  Some  of  our  public 
men,  certainly  the  ablest,  so  far  as  the  Eastern  com- 
munities of  this  country  are  concerned,  suggested  pro- 
scriptive  legislation  against  Great  Britain  to  compel 
that  country  to  co-operate  with  the  United  States  in  the 
unrestricted  free  coinage  of  silver  at  a  ratio  of  16  to  i, — 
the  most  egregious  folly  of  the  times.  And  what  is  to 
be  thought  of  the  action  of  Congress  as  a  body  in  refus- 
ing to  incorporate  the  word  "  gold "  in  the  terms  of 
bonds  which  were  to  be  offered  only  for  gold.  While 
disavowing  any  sentiment  of  disrespect  to  individual 
believers  in  free  silver  and  greenbacks, — for  while 
opposed  to  heresy  I  can  respect  heretics, — I  must  say 
that  in  view  of  all  the  facts,  which  are  too  numerous 
to  cite  here,  the  action  of  Congress  in  refusing  to 
incorporate  the  word  "  gold  "  was  in  my  opinion  inde- 
fensible, and  it  was  repeated,  and  is  only  in  accord  with 
the  vice  inherent  in  the  general  agitation  for  free  silver, 
namely,  a  desire  to  pay  a  creditor  something  less  than 
one  owes.  It  was  an  action  in  its  essence  not  wholly 
unlike  that  of  the  North  Carolina  banks,  about  1821, 
that  loaned  their  own  irredeemable  notes  to  the  public 
on  condition  that  the  customers'  discounted  paper  be 
paid  in  specie.  What  inference  should  honest  men 
draw  from  the  noncommittal  action  of  Congress  ?  If  a 
banker  knew  a  borrowing  customer  to  be  maneuvering 
to  pay  his  debts  in  money  of  less  value  than  that 


86 

borrowed,    hovfr    long    would    the    banker    trust    that 
customer  ? 

Talleyrand  admonished  the  National  Assembly  dur- 
ing the  French  Revolution  in  the  following  significant 
language : 

"  You  can  arrange  it  so  that  people  shall  be  forced  to 
take  a  thousand  francs  in  paper  for  a  thousand  francs 
in  specie,  but  you  never  can  arrange  it  so  that  the 
people  shall  be  obliged  to  give  a  thousand  francs  in 
specie  for  a  thousand  francs  in  paper." 

But  did  the  National  Assembly  heed  the  timely  sug- 
gestion ?  Not  one  whit.  In  effect  they  said,  "  Vox 
populi,  vox  Dei !  "  and  rushed  on  pell  mell  to  ruin. 

The  same  thing  has  just  occurred  in  Argentina.  It 
had  been  the  general  boast  among  those  who  were 
pushing  on  the  "  boom  "  there  that  Argentina  was  an 
"  exceptional  country,"  and  that  the  ordinary  laws  of 
trade,  currency  and  banking,  however  inexorable  in 
their  operation  elsewhere,  had  no  significance  or  appli- 
cability in  the  Argentine  Republic. 

Referring  to  Senator  Mitchell's  declaration  for  rais- 
ing the  price  of  silver  and  other  products  by  legislation, 
as  another  exhibition  of  political  subserviency  to  sup- 
posed popular  clamor,  I  take  the  liberty  of  mentioning 
two  planks  in  the  State  platform  of  a  political  party, 
in  convention  assembled  at  Sacramento,  June  20,  1894, 
favoring  the  free  and  unlimited  coinage  of  silver  at  the 
ratio  of  1 6  to  i  ;  and  for  the  protection  of  the  farmer, 
declaring  that  "  the  Government  of  the  United  States 
should  reduce  the  cost  of  transporting  the  staple  agri- 
cultural products  from  American  seaports  to  foreign 


87 

seaports,  to  the  end  that  the  prices  of  the  products 
should  be  advanced;"  adding,  "  and  for  that  purpose, 
inasmuch  as  an  export  can  be  protected  in  no  other 
manner,  we  pronounce  ourselves  in  favor  of  the  use  of 
a  limited  portion  of  the  receipts  of  the  United  States 
customs  for  such  purposes,"  etc.  I  only  wish  to  show 
by  these  examples  what  absurdities  men  will  commit 
themselves  to  in  the  pursuit  of  gain  or  political  place 
and  power.  Even  Mr.  Harvey  has  not  equaled  in 
folly  the  two  examples  of  local  origin  cited. 

For  thirty  years  these  United  States  of  America 
have  fumbled  and  shilly-shally ed  with  the  financial  and 
fiscal  problems  of  the  country  as  if  there  were  no  eco- 
nomic laws  on  the  subject  known  to  civilized  peoples, 
have  treated  money  from  the  standpoint  of  sentiment, 
hysteria,  popular  clamor  and  political  subserviency, 
and  taxation  from  that  of  personal  aggrandizement ; — 
while  there  is  no  law  of  the  universe  known  to  man 
and  judged  by  human  experience  that  works  more 
inexorably  than  certain  well-known  economic  laws. 
What  is  the  excuse  offered  for  such  folly?  The  same 
that  France  offered  when  she  issued  forty-five  thousand 
million  francs  of  assignats ;  that  Argentina  offered  when 
ten  years  ago  she  plunged  into  a  financial  debauch  in  a 
fool's  paradise  of  cheap  money,  ending  in  ruin,  to  wit, 
that  "  We  are  an  exceptional  country,  and  there  is  no 
absolute  criterion  of  economic  laws ; "  in  short,  that  we 
can  defy  all  the  teachings  of  human  experience.  Whom 
the  gods  would  destroy  they  first  make  mad. 

It  is  often  asked  by  the  advocates  of  free  silver,  Why 
do  bankers  generally  favor  gold  ?  The  answer  is :  ist,  it 


88 

is  honest  and  an  equivalent ;  2d,  experience  has  proven 
it  to  be  the  best  standard  of  value ;  3d,  in  the  aggre- 
gate four-fifths  of  all  they  represent  belongs  to  the 
masses,  and  in  protecting  themselves  they  protect  the 
people.  In  other  words,  the  man  who  pursues  rational 
and  conservative  methods  to  avoid  or  to  lessen  the  dan- 
ger of  financial  confusion  and  disaster  is  the  man  who 
seeks  to  maintain  the  best  standard,  thereby  protecting 
himself  as  well  as  his  fellow-men, — those  upon  whose 
favor  his  prosperity  depends. 

If  a  nation  that  has  reached  the  gold  stage  of  indus- 
trial development  should  adopt  the  single  silver  stan- 
dard, it  would  surely  place  itself  under  a  disastrous 
disadvantage  in  its  commercial  transactions  with  gold- 
standard  nations,  which  at  the  present  time  represent 
more  than  70  per  cent  of  the  commerce  of  the  world, 
and  would  involve  itself,  temporarily  at  least,  in  national 
and  individual  bankruptcy.  Any  attempt  to  make  the 
cheaper  of  two  metals  the  standard — and  the  free  coin- 
age of  silver  means  no  less — will,  under  all  possible 
circumstances,  expel  the  dearer  from  circulation. 

I  venture  the  opinion  that  however  much  unrest, 
perturbation  and  travail  any  Western  power  may  go 
through  in  a  monetary  way,  it  will,  if  true  to  its  best 
interests,  be  sure  to  adopt  at  last  the  best  standard  of 
value,  that  is,  the  one  of  intrinsic  equivalency ;  and 
intrinsic  equivalency  is  determined,  not  by  statutory 
enactment,  congresses  or  conferences,  but  by  the  value 
placed  upon  a  given  commodity  by  the  commercial 
world ;  and  by  this  token  gold  is  the  true  standard  of 


89 

value.  It  is  not  a  question  of  politics,  but  of  science 
and  ethics,  and  one  of  superlative  importance 

To  legislate  that  over  $5,000,000,000  of  savings  and 
capital  in  savings  and  commercial  banks,  all  the  fire 
and  life  insurance  obligations  of  the  country,  and  all 
the  railway  and  other  bonds  and  interest  due  thereon, — 
an  aggregation  of  say  $20,000,000,000, — should  be  paid 
in  silver,  on  an  unrestricted  free-coinage  basis,  to  say 
nothing  of  seven  thousand  millions  of  dollars  per 
annum  of  wages  to  the  people  at  large,  would  be  to 
work  an  injustice  that  could  not  be  anything  less  than 
nationally  calamitous  in  its  results.  For  the  United 
States  to  engage  in  the  independent,  unlimited  free 
coinage  of  silver  would  simply  be  financial  insanity. 
And  while  I  cannot  believe  that,  in  the  final  appeal  to 
the  common  sense  and  right  principle  of  the  American 
people,  they  will  commit  the  government  of  this  country 
to  a  policy  of  economic  madness  and  repudiation,  the 
agitation  of  free  silver  advocates  and  the  attitude  of  the 
United  States  Senate  have  already  imposed  incalculable 
loss  upon  the  people  and  now  seriously  retard  the 
return  of  industrial  activity  and  general  prosperity. 

"  Money  is  essentially  rebellious  to  the  orders  of 
government.  It  comes  without  being  called  and  goes 
without  being  arrested, — is  deaf  to  advances  and  insen- 
sible to  threats."  With  unlimited  free  coinage  it  is 
impossible  to  have  both  metals  circulate  simultaneously, 
concurrently  and  indiscriminately.  We  must  choose 
between  them  and  accept  one  as  the  standard. 

UNDER   WHICH   KING,  BEZONIAN? 


CURRENCY. 

QENATOR  SHERMAN,  in  his  article,  "  Deficiency 
O  in  Revenue  the  Cause  of  Financial  Ills,"  in  The 
Forum  for  April,  in  speaking  of  greenbacks,  etc.,  which 
he  has  termed  "  A  truly  American  currency,"  says  : 

"  They  are  a  debt  of  the  United  States  without  interest 
and  without  other  material  cost  to  the  Government  than 
the  interest  on  the  cost  of  the  coin  or  bullion  held  in  the 
Treasury  to  redeem  them" 

In  considering  the  subject  of  currency  it  seems  perti- 
nent to  define  standards  and  measures  of  value. 

"  The  giving  of  money  for  a  commodity  is  termed 
buying^  and  the  giving  of  a  commodity  for  money,  sell- 
ing. Price,  unless  when  the  contrary  is  particularly 
mentioned,  always  means  the  value  of  a  commodity  rated 
in  money" — McCuLLOCH. 

A  standard  of  value  is  simply  a  definite  quantity,  by 
weight,  of  pure  metal  designated  by  law  as  the  unit  of 
account,  usually  represented  by  coins  whose  weights  are 
multiples  or  divisional  parts  of  the  unit  thus  desig- 
nated. It  is  not,  however,  necessarily  a  coin  itself,  but 
may  be  simply  a  theoretical  unit  of  weight,  represented 
by  no  existing  coin,  as  is  the  case  with  the  money  tael 
of  China,  or  an  actual  unit  of  weight,  as  the  pound  of 
sterling  silver  formerly  was  in  England. 

It  is,  therefore,  simply  an  immutable  unit  of  magni- 
tude representing  a  unit  of  account,  and  is  employed  as 


a  numerator  by  weight  of  standard  coins  representing 
its  multiples  and  divisional  parts,  to  which  the  law 
affixes  certain  names  as  a  means  of  identification,  and 
which  indicate  the  denominate  or  numerary  values  of 
such  coins,  by  means  of  which  the  ratio  or  relations  of 
exchangeable  value  subsisting  between  standard  money 
and  commodities,  or  between  commodities,  as  rated  in 
money,  are  expressed  and  determined.  As  exchange- 
able value,  which  is  synonymous  with  price,  is  only  an 
ideal  relation  subsisting  between  things  commutable, 
having  neither  length,  breadth,  thickness,  weight  nor 
volume,  it  cannot  be  measured  by  a  mere  mechanical 
application  of  the  standard  unit  of  measure  to  the  thing 
measured,  as  in  the  case  of  all  other  standard  measures. 
A  standard  of  value,  therefore,  unlike  other  standards, 
performs  its  functions  as  a  measure  of  value  by  means 
of  its  intrinsic  equivalency  in  exchangeable  value  as  a 
commodity,  as  determined  by  its  market  price  as  com- 
pared with  that  of  the  thing  to  be  measured,  and  for 
which  it  is  to  be  exchanged.  Its  exchangeable  value, 
therefore,  as  a  commodity  in  the  markets  of  the  world, 
will  always  control  the  purchasing  power  of^  coined 
money  regardless  of  its  denominate  value  as  fixed  by  law. 
A  measure  of  value  differs  from  a  standard  of  value 
in  this,  that  it  may  consist  of  anything  which  possesses 
exchangeable  value,  whether  in  the  form  of  money,  com- 
modities or  services  which  may  be  given  in  payment  as 
an  exchangeable  equivalent  of  the  thing  bought  as 
rated  in  standard  coins  of  account.  When,  therefore, 
coined  money  is  given  in  payment  of  a  commodity  pur- 
chased, it  performs  the  double  function  of  serving  both 


92 

as  a  standard  and  a  measure  of  value.  But  as  in  the 
latter  capacity  it  does  not  represent  two  per  cent  of  the 
exchanges  arising  from  trade  and  commerce,  by  far  its 
most  important  function  is  as  a  standard  of  value  for 
rating  the  different  signs  of  value  employed  in  effecting 
the  exchange  and  distribution  of  the  products  of  human 
industry.  And  for  such  purposes  its  capacity  is  abso- 
lutely unlimited,  as  it  is  only  employed  as  an  economic 
potential  for  differentiating  arbitrated  exchanges  in  the 
liquidation  of  balances  and  settlement  of  credits,  and  not 
as  a  material  recompense  or  exchangeable  equivalent  as 
when  employed  as  a  measure  of  value.  This  technical 
distinction  is  only  important  in  so  far  as  it  serves  to 
refute  the  alleged  insufficiency  of  the  supply  of  gold  for 
the  purposes  of  currency,  seeing  that  fully  98  per  cent 
of  the  exchanges  it  effects  are  simply  as  a  standard  of 
value  in  the  rating  and  differentiation  of  exchanges 
effected  by  credits  and  other  instrumentalities  of  trade 
and  commerce  serving  as  the  actual  measures  of  value, 
and  that  this  alleged  insufficiency  has  not  the  remotest 
connection  with  the  phenomena  of  falling  prices  and  the 
depression  of  trade. 

Succinctly  stated :  A  measure  of  value  may  be  any- 
thing possessing  exchangeable  value  which  is  actually 
given  or  exchanged  for  anything  purchased,  as  its 
exchangeable  equivalent  as  rated  in  standard  money, 
and,  therefore,  always  expresses  the  relation  of  value 
subsisting  between  money  of  account  and  commodities, 
or  between  commodities  compared  one  with  another. 

A  standard  of  value  is  simply  a  fixed  and  immutable 
unit  of  weight  of  a  precious  metal  designated  by  law  as 


93 

the  unit  of  account  by  which  all  other  values  are  rated, 
by  means  of  its  own  intrinsic  equivalency  as  a  commod- 
ity in  the  markets  of  the  world.  It  is  usually  repre- 
sented by  coins,  but  not  necessarily  so.  Its  exchange- 
able value  as  a  commodity  will  therefore  always  control 
the  purchasing  power  of  coined  money  regardless  of  its 
'denominate  or  numerary  value. 

Imaginary,  ideal  or  merely  denominative  money,  not 
infrequently  called  money  of  account,  bank  or  book 
money,  makes  its  appearance  in  the  records  of  Western 
Europe  in  the  twelfth  century,  while  an  actual  coinage 
to  correspond  therewith  does  not  appear  noted  any- 
where until  a  century  later.  The  first  of  this  denom- 
inative money  that  we  read  of — after  the  actual  gold 
augustale  of  Frederick  of  Sicily — is  the  florin  de 
sigillia,  or  florin  of  the  public  seal,  in  the  banking  and 
commercial  life  of  Florence  ;  the  next  is  the  zechina 
grossi  and  zechina  (Tor  of  Venice.  Later  we  find  these 
conventional  measures  of  value  appearing  in  accounts 
of  Flanders, — Antwerp,  Bruges,  etc.,  and  of  Germany 
at  Nuremburg  and  Hamburg,  and  ultimately  in  the 
pound  sterling  of  England. 

A  feature  of  accounting  by  these  fixed  standards, 
beginning  with  their  adoption  in  Florence  and  subse- 
quently in  Venice,  was  the  integrity  and  general 
satisfaction  that  characterized  commercial  and  financial 
transactions  under  them,  that  is  to  say,  the  fixity  and 
approximate  equivalency  of  payments  thus  assured  by 
the  adjustment  of  actual  money  to  these  standards  in 
banks  and  commercial  houses ;  and  it  appears  that 
wherever  this  practice  existed  it  drew  around  the  nations 


94 

or  the  peoples  so  operating  an  ever-increasing  volume 
of  business,  though  of  course  the  general  trend  of  trade, 
from  the  dawn  of  history,  has  been  from  the  East 
toward  the  West.  Thus  the  commercial  importance  of 
Florence  and  Venice  during  the  thirteenth,  fourteenth 
and  fifteenth  centuries  was  transferred  to  Flanders*  in 
the  sixteenth  century,  and  to  London  in  the  seventeenth, 
eighteenth  and  nineteenth. 

It  may  also  be  in  order  to  give  examples  of  the 
difference  there  may  be  between  currency,  standard 
money,  money  of  account, — in  terms, — and  money  of 
redemption. 

In  Colonial  Virginia:  Warehouse  receipts  were  the 
currency,  pounds,  shillings  and  pence  the  money  of 
account,  and  tobacco  the  money  of  redemption. 

In  Colonial  Massachusetts:  Wampum  was  the  cur- 
rency, pounds,  shillings  and  pence  the  money  of  account, 
and  beaver  skins  the  money  of  redemption. 

In  Colonial  South  Carolina :  Warehouse  receipts  the 
currency,  pounds,  shillings  and  pence  the  money  of 
account,  and  rice  the  money  of  redemption. 

In  California :  Gold  has  chiefly  been  the  currency, 
dollars  and  decimals  the  money  of  account,  and  gold  of 
ultimate  redemption. 

Throughout  the  United  States  at  present,  green- 
backs, Treasury  demand  notes,  National  bank  notes 
and  silver  certificates  are  the  currency,  dollars  and 
decimals  the  money  of  account, — in  terms, — and,  legally, 

*  The  capture  of  Antwerp  by  the  Duke  of  Parma,  one  of  the  Generals  of  Philip  of 
Spain,  in  the  latter  part  of  the  sixteenth  century,  caused  the  downfall  of  that  city's 
commerce,  and  abruptly  transferred  the  same  to  I/ondon,  including  not  less  than  one- 
third  of  the  merchants  and  manufacturers  who  had  previously  resided  at  Antwerp. 


95 

both  gold  and  standard  silver  the  money  of  redemp- 
tion ;  —  though  it  being  declared  in  the  so-called 
Sherman  Act  of  July  14,  1890,  to  be  the  policy  of  the 
Government  to  maintain  the  parity  of  the  two  metals, 
the  rule  in  actual  practice  has  been  to  use  gold  only 
as  the  money  of  ultimate  redemption,  this  being  essen- 
tial to  the  maintenance  of  silver  on  a  parity  with 
gold. 

The  term  "  money  of  account "  is  used  very  indis- 
criminately, ordinarily  referring  to  sterling,  as  in 
actual  commerce  there  are  at  present,  strictly  speaking, 
only  two  moneys  properly  so  designated, — the  English 
pound  sterling  and  the  Chinese  tael,  both  of  which 
names  are  merely  denominative,  there  being  no  such 
coins  as  a  pound  or  a  tael.  The  English  sovereign, 
however,  represents  the  pound  sterling.  The  Chinese 
tael  is  the  oldest  ideal  or  conventional  standard  of 
value  of  which  we  have  any  account,  dating  back  some 
2,000  years.  The  Shanghai  tael  represents  568  grains 
of  pure  silver,  and  the  Hong  Kong  or  Canton  579-3% 
of  pure  silver,  which  accounts  for  the  difference  in 
exchange  on  Hong  Kong,  Canton  or  Shanghai. 

For  this  country  the  United  States  Statutes  define 
dollars  and  decimals  as  money  of  account.  But  the 
variety  of  money  actually  in  use  is  notable,  there 
being  no  less  than  ten  different  kinds,  namely,  cop- 
pers, nickels,  subsidiary  silver,  standard  silver,  silver 
certificates,  standard  gold,  gold  certificates,  greenbacks, 
demand  notes,  and  National  bank  notes. 

However,  despite  all  the  noisy  contention  of  the  past 
twenty  years  as  to  the  unit  of  value,  and  the  standard 


96 

of  value,  and  although  the  Revised  Statutes  and  Stat- 
utes at  Large  direct  the  issue  and  prescribe  the  uses, 
more  or  less  limited,  of  several  kinds  of  currency,  as 
already  stated,  to  but  one  do  they  assign  the  office  of 
standard.  To  but  one  dollar — the  gold  dollar — do  they 
assign  the  function  of  "  a  unit  of  value."  The  func- 
tion of  a  gold  dollar  as  the  unit  of  value  is,  therefore, 
unqualified  and  unquestionable.  Its  value  is  the  unit 
of  value.  Its  measure  is  made  the  only  measure.  To 
that  measure  every  other  dollar  must  conform,  while 
other  dollars  exist,  and  this  law  of  Congress  stands. 
Yet,  despite  this  fact,  for  a  score  of  years  governors 
and  senators  have  been  declaiming  as  if  gold  were  not 
the  standard. 

It  may  not  be  amiss  to  say  a  word  here  regarding 
the  common  confusion  of  ideas  as  to  capital.  Money 
may  be  capital,  but  capital  is  not  generally  money. 
Capital  is  the  difference  between  total  production  and 
total  consumption, — values  at  rest, — free  from  lien  ; 
and  for  one  large  capitalist  there  are  many  small  ones. 
Only  that  part  of  wealth  is  capital  which  is  or  may  be 
used  for  the  production  of  other  wealth. 

The  United  States  affords  to-day  a  very  remarkable 
financial  spectacle.  The  banks  present  an  almost 
united  front  in  favor  of  one  policy,  Congress  of 
another.  However  they  may  differ  on  other  questions, 
the  bankers  of  the  country  believe  that  the  time  has 
come  when  the  Government  currency — United  States 
notes  and  Treasury  notes — should  be  retired ;  while 
neither  political  party  in  Congress  favors  such  a  measure. 


97 

The  attitude  of  the  Senate  particularly  may  be  fairly 
expressed  in  the  written  words  of  a  United  States  Sen- 
ator to  myself,  as  follows  : 

"  You  are  not  so  broad  in  your  views  upon  bimetal- 
lism as  I  would  like  to  see  you.  But  then  I  attribute 
this  to  your  association  with  gold  men,  or  with  those 
who  believe  in  reducing  the  volume  of  money  so  that 
they  can  better  control  the  money  commodity  of  the 
country,  and  thus  take  advantage  of  the  necessities  of 
others." 

This  indicates  an  utter  misapprehension  of  the  prin- 
ciples or  natural  law  and  commercial  usage  that  govern 
the  efficiency  and  movement  of  money.  Despite  two 
thousand  years  of  woeful  experience  in  all  sorts  of 
statutory  devices,  that  is,  kingly  decrees  and  Govern- 
ment fiat,  and  the  manifest  fallacy  thereof,  we  are  yet 
confronted  with  the  amazing  spectacle  of  a  majority  of 
most  potent,  grave  and  reverend  signiors,  our  very 
noble  and  approved  good  legislators,  sitting  in  the 
United  States  Senate  chamber  to  conserve  the  welfare 
of  this  country,  and  not  only  entertaining  the  thought 
but  asserting  it,  and  by  arbitrary  legislative  tactics 
seeking  to  impose  a  currency  upon  the  country  which 
would  have  for  its  maintenance  as  a  standard  of  value, 
not  intrinsic  equivalency  or  commercial  concurrence, 
but  Government  fiat  merely,  and  out  of  which  would 
inevitably  ensue  the  collapse,  disaster  and  misery  which 
have  attended  the  practical  application  of  every  such 
device  since  the  world  began,  and  always  and  every- 
where in  a  special  manner  augmented  the  burdens  of 
the  working  people, — the  wage-earners  of  mankind. 


98 

The  widespread  delusion  in  the  niind  of  this  genera- 
tion of  Americans  on  the  subject  of  money,  namely, 
that  Government  fiat  creates  values,  is  peculiarly  due 
to  the  Legal  Tender  Act  of  1862,  and  the  subsequent 
action  of  a  Supreme  Court  in  upholding  the  right  of 
Congress  to  issue  such  money.  Thus  bad  began,  and 
worse  remained  behind ;  out  of  this — the  continued 
existence  of  this  fiat  money  (for,  as  said  by  Thomas 
Paine,  regarding  Continental  currency,  "  Every  stone 
in  the  bridge  that  carried  us  over  seems  to  have  had  a 
claim  upon  our  esteem") — was  developed  the  silver  craze. 

The  financial  policy  of  the  founders  of  our  Govern- 
ment, as  manifested  in  the  proceedings  and  discussions 
attending  the  adoption  of  the  Federal  Constitution, 
and  in  their  subsequent  legislation,  indicated  sound 
views  on  money ;  and  clearness  of  definition  as  to  the 
proper  measure  of  value  characterized  all  their  utter- 
ances, and  all  the  monetary  legislation  of  the  country 
down  to  the  time  that  the  silver  question  made  its 
appearance  in  our  politics.  Greenbacks,  though  not 
redeemable  in  coin,  were  exchangeable  for  Government 
bonds,  that  were  payable,  principal  and  interest,  in  coin  ; 
and  coin  practically  meant  gold,  under  the  acts  of 
1834-37  and  1853,  for  that  was  really  the  money  of 
ultimate  redemption ;  and,  although  a  majority  of  a 
Supreme  Court  of  the  United  States  finally  declared 
the  Greenback  Act  constitutional, — after  such  an  inter- 
pretation had  been  denied, — there  is  no  reason  to  doubt 
that  it  was  the  intention  of  the  framers  of  the  Consti- 
tution to  withhold  from  Congress  the  power  of  making 
paper  money  a  legal  tender. 


99 

Pelatiah  Webster,  writing  about  the  close  of  the 
Revolutionary  War,  and  referring  to  Continental  money, 
said  : 

'  We  have  suffered  more  from  this  than  from  every 
other  cause  of  calamity  ;  it  has  killed  more  men,  per- 
vaded and  corrupted  the  choicest  interests  of  our  coun- 
try more,  and  done  more  injustice,  than  even  the  arms 
and  artifices  of  our  enemies." 

Judge  Story,  referring  to  the  revolutionary  and  post- 
revolutionary  legal-tender  laws,  and  following  the  lines 
and  phraseology  of  Judge  Marshall's  opinions,  says : 

'  They  entailed  the  most  enormous  evils  on  the 
country,  and  introduced  a  system  of  fraud,  chicanery 
and  profligacy  which  destroyed  all  private  confidence 
and  all  industry  and  enterprise." 

Robert  Morris  said  : 

"  It  has  caused  infinite  private  mischief,  numberless 
frauds,  and  the  greatest  distress." 

When  the  bill  to  make  greenbacks  a  legal  tender 
was  being  discussed  in  Congress,  the  Hon.  Roscoe 
Conkling  of  New  York  said  : 

"  But,  passing  from  the  constitutional  objections  to 
the  bill,  it  seeins  to  me  that  its  moral  imperfections  are 
equally  serious.  It  will,  of  course,  proclaim  through- 
out the  country  a  saturnalia  of  fraud,  a  carnival  for 
rogues.  But  surmounting  every  legal  impediment  and 
every  dictate  of  conscience  involved,  viewing  it  as  a 
mere  pecuniary  expedient,  it  seems  too  precarious  and 
uncompromising  to  deserve  the  slightest  confidence.  I 
do  not  believe  that  you  can  legislate  up  the  value  of 
anything  any  more  than  I  believe  you  can  make  gen- 
erals heroes  by  legislation.  The  Continental  Congress 


100 

tried  legislating  values  up  by  resort  to  penalties,  but 
the  inexorable  laws  of  trade,  as  independent  as  the 
law  of  gravitation,  kept  them  down.  I  do  believe  that 
you  can  legislate  a  value  down,  and  that  you  can  do  it 
by  attempting  to  legislate  it  up." 

Senator  William  Pitt  Fessenden  of  Maine,  after- 
ward Secretary  of  the  Treasury,  said  : 

"  To  make  the  best  of  the  matter  it  is  bad  faith,  and 
encourages  bad  morality  both  in  public  and  in  private. 
Going  to  the  extent  that  it  does,  to  say  that  notes  thus 
issued  shall  be  receivable  in  payment  of  all  private 
obligations,  however  contracted,  is  in  its  very  essence 
a  wrong ;  for  it  compels  one  man  to  take  from  his 
neighbor,  in  payment  of  a  debt,  that  which  he  would 
not  otherwise  receive,  or  be  obliged  to  receive,  and 
what  is  probably  not  full  payment. 

"  Again:  It  encourages  bad  morals,  because,  if  the 
currency  falls  (as  it  is  supposed  it  must,  else  why 
defend  it  by  a  legal  enactment),  what  is  the  result  ?  It 
is,  that  every  man  who  desires  to  pay  off  his  debts  at  a 
discount,  no  matter  what  the  circumstances  are,  is  able 
to  avail  himself  of  it  against  the  will  of  his  neighbor, 
who  honestly  contracted  to  receive  something  better  ;  I 
say,  therefore,  that  another  objection  has  been  stated, 
of  which  the  force  must  be  admitted,  and  that  is  that 
it  is  bad  faith. 

"  Again  :  Necessarily  as  a  resort,  in  my  judgment, 
it  must  inflict  a  stain  upon  national  honor.  We  owe 
debts  abroad  yet.  Money  has  been  loaned  to  this 
country,  and  to  the  people  of  this  country,  in  good 
faith.  Stocks  of  our  private  corporations,  stocks  of  our 
States  and  our  cities,  are  held  and  owned  abroad.  We 
declare  that  for  the  interest  on  all  this  debt,  and  the 
principal  if  due,  these  notes,  made  a  legal  tender  by 
Act  of  Congress,  at  whatever  discount  they  shall  stand, 


101      . 

shall  be  receivable.  Payment  must  be  enforced,  if  at  all, 
in  the  courts  of  this  country,  and  the  courts  of  this 
country  are  bound  to  recognize  the  law  that  we  pass. 

"  Again :  It  necessarily  changes  the  values  of  prop- 
erty. What  is  the  result  ?  Inflation,  subsequent 
depression,  all  the  evils  which  follow  from  an  inflated 
currency.  They  cannot  be  avoided ;  they  are  inevi- 
table ;  the  consequence  is  admitted. 

"  Again :  A  stronger  objection  than  all  that  I  have  to 
this  proposition — I  am  stating  the  objections  which 
everybody  must  entertain,  because  I  suppose  these  facts 
are  palpable — is  that  the  loss  is  to  fall  most  heavily 
upon  the  poor.  I  believe  it  never  was  disputed — it  can- 
not be  in  the  light  of  experience — that  those  who  are 
injured  most  by  an  inflated  currency  are  the  laboring 
people,  the  poor.  The  large  capitalists  can  bear  it ; 
but  there  are  small  capitalists  in  this  country  whom  it 
will  vastly  injure.  When  you  speak  of  a  capitalist,  in 
the  common  acceptation  of  the  term,  yon  mean  a  rich 
man ;  but  every  man  who  is  free  from  debt  and  earning 
something,  and  earning  a  surplus,  is  a  capitalist,  and 
the  greater  number  of  capitalists  together  make  up 
a  great  whole ;  and  these  are  the  men  who  suffer  by  the 
disorder  of  affairs, — the  poor  laborer,  in  the  first  place, 
more  than  all ;  the  small  capitalist,  if  I  must  so  call 
him,  next ;  and  the  rich  capitalist  last  of  all.  Such  is 
the  necessary  result  and  consequence  always  of  this 
system" 

AND  ALL  THE  EVILS  PREDICTED  CAME 
TO  PASS. 

Prof.  Andrew  D.  White  says,  in  his  sketch  of  the 
paper-money  inflation  in  France : 

"  A  curious  parallel  may  perhaps  be  drawn  between 
Necker,  the  Finance  Minister  at  the  beginning  of  the 


,      IO2 

French  Revolution,  and  the  Secretary  of  the  Treasury 
at  the  beginning  of  the  recent  struggle  in  our  own 
country.  Each  had  shown  his  ability  to  build  up  a 
fortune  for  himself  before  he  entered  public  life ;  each 
had  shown  great  financial  skill  and  integrity ;  each  had 
thus  secured  the  confidence  of  the  thoughtful  part  of 
the  nation  in  the  time  of  national  difficulty ;  each  had 
proposed  measures  and  carried  them  out  which  resulted 
in  great  good ;  each  attempted  to  stop  the  nation  on  the 
downward  path  of  inflation ;  each  was  at  last  obliged  to 
succumb ;  and  each  retired  from  the  country  which  he 
had  endeavored  to  save, — Necker  to  Switzerland,  Hugh 
McCullough  to  England." 

To  the  credit  of  Salmon  P.  Chase,  he,  as  Chief  Justice 
of  the  Supreme  Court  of  the  United  States,  said  of  his 
own  creation,  the  greenback,  in  the  Hepburn  case, 
1869: 

'  That  the  making  of  notes  or  bills  of  credit  a  legal 
tender  for  pre-existing  debts  is  not  a  means  appropriate, 
plainly  adapted,  or  really  calculated  to  carry  into  effect 
any  expressed  power  vested  in  Congress,  is  inconsistent 
with  the  spirit  of  the  Constitution,  and  is  prohibited  by 
the  Constitution  ;"  and,  finally,  u  the  legal-tender 
quality  was  only  valuable  for  purposes  of  dishonesty. 
Every  honest  purpose  was  answered  as  well  or  better 
without  it." 

In  1 86 1  the  Government  had  none  other  than  coined 
legal-tender  money  of  intrinsic  equivalency.  Since 
Jackson  destroyed  "  the  bank "  and  made  its  revival 
"  an  obsolete  idea,"  there  had  been  no  other.  In  green- 
backs, Congress  authorized  the  emission,  for  the  first 
time  in  the  history  of  the  Government  under  the  present 


io3 

Constitution,  of  United  States  paper  notes  as  legal  ten- 
der in  payment  of  all  private  debts,  which  legal-tender 
clause  the  Supreme  Court,  as  already  stated,  declared 
unconstitutional  (as  to  antecedent  debts),  and  then  (on 
reargument  before  a  court  with  two  new  judges)  reversed 
that  decision.  Then  Congress,  by  a  ten  per  cent  tax, 
swept  all  State  bank  issues  out  of  existence  to  make 
room  for  National  bank  notes.  For  eighteen  years 
those  greenbacks  and  bank  notes  were  inconvertible  into 
coin;  and,  as  I  have  shown  in  my  article  on  "  Interna- 
tional Bimetallism,"  robbed  wage-earners  of  half  their 
earnings.  As  the  best  experts  estimate, — for  example, 
Professor  Adams  and  Edward  Atkinson, — they  doubled 
the  cost  of  the  Civil  War,  and  have  been  a  continual 
burden  ever  since. 

In  1875  the  promise  was  held  out  of  paying  and 
extinguishing  in  1879  the  greenback  debt.  It  was  not 
done;  but,  on  the  contrary,  the  law  of  1878  made  it 
unlawful  to  cancel  or  retire  any  more  greenbacks,  and, 
even  after  payment,  the  Treasury  was  commanded  to 
reissue  them,  pay  them  out  again,  and  keep  them  in 
circulation.  The  law  of  1878  reads  thus: 

"  And  when  any  of  said  notes  may  be  redeemed  or  be 
received  into  the  Treasury,  under  any  law,  from  any 
source  whatever,  and  shall  belong  to  the  United  States, 
they  shall  not  be  redeemed,  canceled  or  destroyed,  but 
they  shall  be  issued  and  paid  out  again  and  kept  in 
circulation." 

In  like  manner  the  Sherman  Law  of  1890  required  the 
redeemed  greenbacks  to  be  reissued.  That  u  endless 


104 

chain  "  of  redemption  is  the  cause  of  our  recent  cur- 
rency and  gold  trouble  and  deficiency  in  the  amount  of 
our  gold  reserve. 

Congress  began,  in  1878,  the  Treasury  purchasing 
and  coining  of  silver  dollars,  and  enlarged  the  opera- 
tions in  1890,  by  which  some  425,000,000  of  silver 
dollars  were  coined.  These  silver  dollars,  manufactured 
by  the  Treasury  Department,  cost  on  an  average  seventy- 
one  cents  each.  To-day  they  can  be  made  for  fifty- 
three  cents.  They  were  sold  or  paid  out  of  the  Treasury 
for  a  dollar  each.  Besides  some  $80,000,000  of  sub- 
sidiary silver  coins,  there  had  been  issued,  under  the 
so-called  Sherman  Act,  $155,000,000  of  new  greenback 
debts  in  payment  for  the  purchase  of  silver. 

At  the  Brussels  Conference  of  1892  Senator  Allison, 
one  of  the  United  States  delegates,  said : 

u  Our  country,  in  its  currency  and  in  all  its  money, 
rests  upon  the  gold  standard.  Our  statutes  declare 
that  it  is  the  settled  purpose  and  policy  of  the  United 
States  to  maintain  silver  and  gold  in  circulation  at  par 
with  each  other,  and  there  is  no  currency  in  circulation 
in  the  United  States,  whether  it  be  paper  or  silver, 
that  is  not  convertible  into  gold  at  the  will  of  the 
holder." 

And  this  is  practically  so,  as  I  shall  proceed  to  demon- 
strate. 

The  law  having  authorized  private  owners  of  the 
silver  dollars  to  deposit  them  in  the  Treasury  and 
receive  therefor  certificates  payable  on  demand  in  silver 
dollars,  some  $330,000,000  of  those  certificates  are  out- 
standing, and,  though  technically  redeemable  in  silver 


dollars  only,  are  in  reality  an  incubus  on  the  gold 
reserve  of  the  Treasury. 

Until  the  question  of  the  diminution  of  the  $100,- 
000,000  gold  reserve  in  the  Treasury  came  to  be  pub- 
licly discussed,  silver  certificates  were  used  directly  in 
procuring  gold  from  the  Government  Sub-Treasuries. 
The  necessity  to  use  all  legal  methods  to  keep  the 
reserve  intact  stopped  the  practice,  but  silver  certifi- 
cates can  now  be  used  to  procure  gold  by  exchanging 
them  through  the  medium  of  brokers,  using  them  as 
bankable  funds,  or  directly  in  the  purchase  of  green- 
backs or  the  gold  itself,  or  by  exchanging  the  silver 
dollars  received  for  them  for  greenbacks.  They  can  be 
deposited  at  par  with  banks,  where  they  are  accepted  as 
bankable  funds.  Checks  against  these  deposits  are 
accepted  by  money  brokers  in  payment  for  gold,  and 
the  commission  thereon.  This  commission  ranges  all 
the  way  from  $1.25  to  $10  per  thousand,  according  to 
the  pressure.  The  effect  which  these  transactions 
have  on  the  reserve  fund  in  the  Treasury  is  that  legal 
tenders  still  circulating  among  the  people  are  accumu- 
lated at  financial  centers  and  presented  to  the  Govern- 
ment for  redemption  in  gold.  The  payments  of  duties 
in  1894  were  made  with  silver  certificates  alone  to  the 
extent  of  66  per  cent,  and  96  per  cent  were  paid  in 
1895  in  silver  certificates  and  other  paper  currency, 
only  4  per  cent  in  gold.  Here  we  have  the  Gresham 
Law  in  operation  on  circulating  notes  and  silver  cer- 
tificates. 

A  notable  paper-money  example  of  this  kind,  fifty 
years  ago, — though  the  law  is  always  in  operation  on 


io6 

any  depreciated  currency,  metallic  or  paper, — was  that 
of  the  so-called  Suffolk  Bank  system  of  Massachusetts, 
viz,  the  circulation  among  the  people  in  and  about 
Boston  of  country  bank  notes  that  were  at  a  discount ; 
while  those  of  the  Suffolk  Bank,  which  were  at  par,  were 
hoarded  by  individuals  or  deposited  in  bank.  By  reason 
of  this  the  circulation  in  Boston  was  at  one  time  $24 
in  country  bank  notes  to  $i  in  those  of  the  Boston 
banks. 

The  sorting  and  culling,  as  we  call  it,  or  garbling,  as 
the  English  call  it,  of  currency  by  money  brokers  is  a 
business  of  this  kind  in  great  cities,  domestic  as  well 
as  foreign,  at  the  present  time;  and  this  is  what  a  free 
silver  friend  calls  a  proof  of  the  natural  cussedness  or 
total  depravity  of  human  nature.  Whether  it  evidences 
depravity  or  not,  it  is  according  to  human  nature  and 
that  economic  principle  which  in  its  wider  application 
constitutes  the  Greshatn  Law. 

There  are  now  over  $500,000,000  of  paper  dollars 
piled  upon  $500,000,000  more  of  greenbacks  and  Treas- 
ury demand  notes,  to  be  perpetually  redeemed  in  gold 
on  demand,  and  then  reissued,  to  be  again  redeemed. 
This  has  been  called,  with  unconscious  irony,  a  "  truly 
American  currency."  The  author  omitted  to  say  that 
the  "  truly  American  currency "  has  been  the  arch 
enemy  of  our  finances;  that  it  occasioned,  in  1893,  one 
of  the  most  disastrous  panics  known  in  our  annals, 
which  occurred  because  of  the  general  belief  that  the 
Treasury  could  not  long  continue  to  redeem  in  gold  on 
demand  the  outstanding  $500,000,000  of  greenbacks 
and  Treasury  notes,  with  the  incubus  of  $330,000,000 


of  silver  certificates  and  $200,000,000  of  National  bank 
notes  on  top  of  them.  Hence  the  repeal  of  the  silver- 
purchasing  law  of  1890. 

This  "  truly  American  currency  "  has,  annually,  dur- 
ing the  last  few  years,  cost  the  Government  $80,000,000 
to  get  the  gold  for  its  "  endless  chain  "  of  redemption, 
to  say  nothing  of  $175,000,000  loss  on  the  silver,  use- 
lessly hoarded  in  the  Government  Treasury  vaults, 
that  caused  it.  For  years  past  the  bulk  of  the  gold 
exported  from  this  country  has  been  for  account  of 
brokers,  demonstrating  that,  under  the  practical  opera- 
tion of  this  "  truly  American  currency,"  resting  on  a 
peremptory  law  of  1878,  the  United  States  Treasury 
Department  is  compelled  to  be  the  purveyor  of  gold  for 
foreign  governments,  home  speculators  and  importers 
of  luxuries.  These  evils  have  been  repeatedly  pointed 
out  by  the  President  and  Secretary  of  the  Treasury, 
but  Congress  has  failed  to  remedy  them.  The  deficit 
in  current  revenues  is  unimportant  compared  with  the 
evils  growing  out  of  the  status  of  greenbacks. 

It  has  been  frequently  alleged  that  bond  sales  for 
gold  have  been  caused  by  the  Wilson  tariff  and  Cleve- 
land administration,  which  is  not  so.  During  the  four 
years,  March  4,  1885,  to  March  4,  1889,  Mr.  Cleve- 
land's first  term,  but  $9,000,000  of  gold  was  exported, 
under  a  tariff  not  appreciably  higher  than  the  present 
so-called  Wilson  tariff,  while  during  the  similar  period 
from  March  4,  1889,  to  March  4,  1893,  Mr.  Harrison's 
term,  chiefly  under  the  McKinley  tariff,  $213,000,000 
was  exported.  In  the  three  years  from  March  4,  1893, 


io8 

to  March  4,  1896,  over  $200,000,000  was  exported. 
The  reason  for  these  increased  exports  of  gold — greater 
demand  for  it — is  to  be  found  in  the  increase  of  the 
currency,  silver  certificates  and  Treasury  demand  notes, 
set  forth  in  Secretary  Foster's  report  of  December  7, 
1892,  to  President  Harrison,  as  follows  : 

"  If  $100,000,000  in  gold  was  a  suitable  or  necessary 
reserve  in  1882  and  1885,  it  would  seem  clear  that  a 
greater  reserve  is  necessary  now.  It  should  be  remem- 
bered that  since  1882  we  have  added  to  our  silver  circu- 
lation $259,016,182  in  standard  silver  dollars  coined 
under  the  old  Silver  Act  of  1878.  These  dollars  are 
nearly  all  outstanding,  largely  represented  by  silver 
certificates,  We  have  also  increased  the  legal-tender 
circulation  by  issuing  about  $120,000,000  of  the  Treas- 
ury notes  authorized  by  the  act  of  July  14,  1890,  and 
to  this  we  are  adding  about  $4,000,000  each  month  in 
payment  of  silver  bullion  purchased." 

When  President  Harrison  left  office  the  gold  balance 
was  but  $113,000,000  and  steadily  falling.  The  first 
year  after  the  Sherman  Act,  July  14,  1890,  nearly  $80,- 
000,000  gold  was  exported,  and  during  its  existence  more 
dollars  of  gold  were  exported  than  were  acquired  of 
silver,  to  say  nothing  of  loss  on  silver  purchased.  Why  ? 
Because  of  the  doubt  in  investors'  minds  of  our  finan- 
cial policy, — a  redundancy  of  silver,  silver  having  fallen 
52  cents  per  ounce  in  three  years,  that  is,  from  119  to 
67  cents. 

Eighteen  years  ago  we  accumulated  one  hundred 
millions  of  gold  to  guarantee  redemption  of  less  than 
three  hundred  and  fifty  millions  of  greenbacks.  This 
was  the  proportion  which  prudent  financiers  judged  to 


109 

be  necessary.  The  redemption  fund  was  about  30  per 
cent  of  the  paper  to  be  redeemed.  We  went  on  from 
that  day  adding  to  our  stock  of  fiat  money,  partly 
silver  dollars,  partly  Treasury  notes,  till  we  have 
placed  six  hundred  millions  on  top  of  the  original 
three  hundred  and  odd  millions,  and  now  have,  of  all 
kinds  of  paper,  over  one  thousand  millions  imposed  on 
a  diminished  gold  reserve,  the  redemption  fund  having 
at  one  time  been  as  low  as  12  per  cent  of  the  currency 
to  be  redeemed.  The  peculiar  inflation  mentioned  by 
Secretary  Foster  now  alone  exceeds  $400,000,000. 

The  two  bond  issues  of  1894,  amounting  to  $100,- 
000,000  in  lo-year  5  per  cents,  and  the  third  issue  in 
February,  1895,  of  $62,315,400  of  3O-year  4  per  cents, 
and  the  fourth  of  $100,000,000  in  February,  1896,  of 
3O-year  4  per  cents,  have  imposed  upon  the  people  of 
this  country  a  debt  of  $262,000,000.  That  is  what  we 
must  pay  directly  for  Government  redemption  of  cur- 
rency ;  what  we  pay  for  greenbacks  and  Treasury 
demand  notes  that  do  not  bear  interest ;  what  we  pay 
for  a  u  truly  American  currency;7'  what  we  pay  for 
having  the  Government  furnish  plenty  of  money.  As 
Emerson  says,  "  We  pay  a  price  for  everything  we  get ; " 
or,  as  Forssell  of  Sweden  said  of  bimetallism,  "  How 
much  liquid  will  it  take  to  fill  a  hogshead  of  which 
there  is  no  possibility  of  stopping  the  bunghole?" 

Since  this  paper  was  typed,  a  friend  has  called  my 
attention  to  a  series  of  articles  in  the  Ladies'  Home 
Journal,  "  This  Country  of  Ours,"  by  ex-President 
Harrison,  in  the  August  number  of  which  he  says  : 


no 

"  If  the  revenues  are  largely  in  excess  of  expendi- 
tures, the  surplus  is  taken  out  of  use  in  commerce  and 
locked  up  in  the  Treasury  vaults,  and  the  money  mar- 
ket is  tightened.  If  the  surplus  is  used  to  buy  Govern- 
ment bonds  not  yet  due,  the  market  is  eased.  The  gold 
reserve,  too,  as  it  is  diminished  by  exportations  of  gold, 
or  increased  by  bond  sales,  powerfully  affects  every 
business  interest.  What  is  the  Treasury  going  to  do  is 
the  query  heard  in  every  bank  and  counting  room  and 
store.  It  is  unfortunate,  I  think,  that  this  should  be  so ; 
and  the  mending  of  existing  conditions  will  be  a  task  for 
the  wisest  and  strongest  statesmanship. 

"  But  while  the  Secretary  of  the  Treasury  has  a  large 
discretion  in  a  few  directions,  and  may  by  its  exercise 
largely  influence  the  money  market,  he  is,  in  the  main, 
conducting  a  great  bank  on  undeviating  and  unelastic 
rules,  and  with  Congress  for  his  board  of  directors.  He 
is  not  chosen  by  the  board,  and  is  rather  often  than  not 
out  of  harmony  with  it.  The  managers  of  the  Bank  of 
England  may,  by  some  small  allowances  in  the  way  of 
interest  or  exchange,  draw  gold  to  its  vaults  from  New 
.York,  and  the  transaction  be  confidential ;  but,  if  fifty 
dollars  would  suffice  to  hold  fifty  millions  of  dollars  in 
the  United  States  Treasury,  the  Secretary  could  not 
expend  that  small  sum.  He  must  stand  by  until  the 
gold  is  gone,  and  then  sell  bonds  to  bring  it  back." 

In  an  admirable  paper  read  before  the  Reform  Club 
of  New  York,  Mr.  W.  Dodsworth  of  the  New  York 
Journal  of  Commerce  said,  in  part : 

"  The  greenback  bug  is  the  most  insidious  pest  of 
these  trying  times.  He  insists  upon  compelling  the 
Government  to  borrow  100  millions  a  year  to  save  its 
notes  from  protest.  He  will  have  no  interference  with 
the  distrust  that  is  causing  foreign  holders  of  our  secu- 
rities to  send  them  home  in  exchange  for  our  gold. 


Ill 

He  insists  upoii  the  acceptance  of  the  notes  being  kept 
perpetually  compulsory.  By  retaining  this  legal-tender 
quality,  he  would  expose  every  form  of  investment,  not 
expressly  payable  in  gold,  to  being  sooner  or  later 
liquidated  in  depreciated  paper.  He  thus  saps  the  very 
foundations  of  all  credit. 

4  There  is  no  hope  for  any  reconstruction  of  our 
currency  worth  the  trouble  of  getting  it,  unless  its  first 
step  be  the  extinction  of  the  legal-tender  notes.  So 
long  as  they  remain  a  lawful  money  of  redemption, 
there  can  be  no  fixed  safety  in  bank  paper  made 
redeemable  in  them.  The  vitiation  of  the  major  cur- 
rency must  necessarily  carry  the  vitiation  of  the  minor. 
Within  the  last  five  years  the  greenback  has  suffered  a 
deterioration  of  credit  from  which  it  can  never  recover. 
At  home  and  abroad  it  has  been  discovered  how  easily 
it  may  become  an  instrument  for  draining  off  our  stock 
of  gold  and  transferring  it  to  the  retentive  custody  of 
the  European  banks.  By  demonstrating  how  easily 
the  notes  may  be  used  for  the  most  dangerous  ends,  a 
direct  blow  is  struck  at  the  credit  of  the  Government, 
and,  therefore,  at  these  obligations.  At  last  a  point  has 
been  reached  in  the  checkered  history  of  this  currency 
at  which  it  hopelessly  discredits  itself  by  the  exposure 
of  its  inherent  lack  of  protection.  It  has  become  an 
expulsive  force  as  against  gold ;  and,  as  such,  it  is 
destructive  of  the  only  resource  for  its  own  redemption. 
We  have  long  been  boastfully  assured  that  the  notes  were 
safe  because  the  Government,  with  its  vast  resources, 
stood  behind  them.  The  world  now  discovers  that  this 
paper  insidiously  saps  and  exhausts  the  funds  through 
which  alone  the  Treasury  can  protect  it,  and  thus  the 
whole  theory  of  State  guaranty  is  exploded.  Thus  the 
greenback  has  lost  its  character,  and  it  can  never 
recover  it.  The  great  mass  of  public  and  private  credit 
built  upon  it  stands  imperiled,  and  the  vast  interests 


112 

thus  threatened  can  never  regain  confidence  until  gold 
takes  the  place  of  these  discredited  promises  to  pay." 

The  issue  of  legal-tender  paper  was  in  direct  violation 
of  that  principle  on  which  so  much  stress  was  laid  by 
our  political  forefathers,  that  no  power  which  can  be  con- 
veniently exercised  by  a  community  should  be  delegated 
to  the  General  Government.  Banking  is  especially 
that  quality.  Practically  all  our  monetary  enactments 
since  the  issuance  of  greenbacks  in  1862,  thirty-four 
years  ago,  have  been  in  conflict  with  this  principle. 
The  Legal  Tender  Act,  and  the  act  taxing  State  bank 
notes  out  of  existence, — a  fine,  nothing  else,  because 
there  is  not  and  never  has  been  any  increment  derived 
from  them,  also  the  act  by  which  silver  was  mechanic- 
ally injected  into  the  currency, — were  such;  and  the  effect 
of  these  several  enactments  in  respect  to  money  issues 
has  been  to  accomplish  a  centralization  in  conflict  with 
the  principles  of  popular  government,  and  to  instill 
into  the  public  mind  utterly  false  conceptions  of  the 
functions  and  powers  of  government. 

Since  1873,  the  date  of  the  omission  of  the  silver  dol- 
lar from  coinage,  the  politicians  of  this  country  seem  to 
have  been  possessed  by  the  idea  that  all  the  laws  of 
political  economy  and  finance  that  have  been  discovered 
by  the  human  race  in  its  slow  and  toilsome  march 
can  be  violated  or  set  aside  by  the  United  States  of 
America ;  and  for  this  economic  heresy  we  are  punished 
year  by  year,  and  will  be  punished  until  we  learn  to 
adopt  a  policy  based  upon  well-known  principles  of 
finance  and  political  economy.  So  long  as  forced-loan 
money — greenbacks — continues,  and  purchased  silver 


bullion  to  the  amount  of  hundreds  of  millions  of  dollars 
remains  uselessly  hoarded,  our  monetary  system  will 
be  disturbed,  and  we  shall  suffer  recurrences  of  panic. 
There  never  can  be  safety  until  this  forced  legal-tender 
money  is  canceled  by  payment  and  retirement. 

The  issuance  of  paper  money  is  properly  a  function 
of  banking,  not  of  Government.  To  have  it  of  high 
efficiency  two  conditions  are  absolutely  essential.  It 
must  rest  upon  the  one  true  basis,  namely,  true  standard 
money  of  precious  metal,  and  it  must  be  bank  and  not 
Government  paper.  True  standard  money  has  been 
well  defined  by  Henry  Cernuschi,  the  Italian  bimetal- 
list: 

"  The  coins  which,  being  melted  down,  retain  the 
entire  value  for  which  they  were  legal  tender  before 
being  melted  down,  are  good  money.  Those  which  do 
not  retain  it  are  not  good  money." 

Walter  Bagehot,  in  "  Lombard  Street,"  says : 

"  In  what  form  the  best  paper  currency  can  be  sup- 
plied to  a  country  is  a  question  of  economical  theory 
with  which  I  do  not  meddle  here.  I  am  only  narrating 
unquestionable  history,  not  dealing  with  an  argument 
where  every  step  is  disputed.  And  part  of  this  certain 
history  is  that  the  best  way  to  diffuse  banking  is  to 
allow  the  banker  to  issue  bank  notes  of  small  amount 
that  can  supersede  the  metal  currency.  As  yet,  his- 
torically, it  is  the  only  introduction  ;  no  nation  as  yet 
has  arrived  at  a  great  system  of  deposit  banking 
without  going  first  through  the  preliminary  stage  of 
note  issue,  and  of  such  note  issues  the  quickest  and 
most  efficient  in  this  way  is  one  made  by  individuals 
resident  in  the  district,  and  conversant  with  it." 


The  Government  of  the  United  States  should  not 
issue  paper  money.  It  is  not  properly  a  Government 
function  ;  for  the  Government  has  no  way  to  protect 
itself  in  the  gold  redemption  of  such  notes,  either  in 
the  rate  of  exchange  or  of  discount.  Under  the  present 
status,  redemption  is  a  cause  of  continual  expense,  and 
this  expense,  in  the  final  analysis,  is  borne  by  the 
people.  Prof.  H.  C.  Adams  estimates  the  cost  of  the 
greenbacks  to  the  people  at  $870,000,000,  Edward 
Atkinson  at  $2,000,000,000.  See  the  latter's  pamphlet 
on  "  Cost  of  Bad  Money." 

This  country  will  be  in  financial  unrest,  uncertainty 
and  apprehension  until  the  law-making  power  retires 
the  greenbacks  and  definitely  affirms  that  all  obliga- 
tions in  terms  of  United  States  of  America  dollars 
shall  always  and  everywhere  mean  payment  on  a  basis 
of  value,  of  intrinsic  equivalency, — in  gold, — as  the 
British  pound  sterling  has  meant  for  one  hundred  and 
eighty  years.  What  is  imperatively  needed  is  not 
more  money,  but  a  policy  of  monetary  legislation  in 
conformity  with  the  laws  of  finance  which  all  human 
experience  has  shown  to  be  certain  in  their  action. 

Our  National  bank  system,  so  far  as  note  circulation 
is  concerned,  seems  to  be  a  failure.  It  was  inaugu- 
rated in  1866 ;  the  maximum  circulation,  $345,000,000, 
was  reached  in  1881 ;  a  minimum,  $123,000,000,  in 
1890 ;  shrinkage  in  nine  years,  64  per  cent ;  circulation 
in  1896,  $200,000,000;  present  shrinkage  from  maxi- 
mum, 43  per  cent. 

I  do  not  propose  to  offer  for  consideration  any  plan 
for  reorganizing  the  currency  and  banking  system  of 


this  country,  though  it  certainly  should  be  organized 
upon  an  independent  basis ;  and  in  the  cases  of  Canada 
and  Scotland  we  have  examples  of  the  highest  mone- 
tary efficiency,  with  a  flexible  maximum  of  bank  notes 
issued  on  a  minimum  of  gold  reserve, — 15  per  cent, — 
the  notes  fortified  by  bonds  and  redeemable  in  gold. 
The  Canadian  system  is  similar  to  that  of  the  New  York 
Safety  Fund  Bank  system,  which  was  in  successful 
operation  for  nearly  fifty  years  before  the  adoption  of 
the  National  bank  system ;  or  the  Massachusetts  Suf- 
folk Bank  system,  which  embraced  at  one  time  500 
banks. 

In  the  great  crash  of  1837,  and  general  suspension 
of  specie  payments  of  119  Massachusetts  banks,  with 
$9,400,000  note  circulation,  under  the  Suffolk  system 
only  eleven  failed  to  resume  specie  payment,  entailing 
a  loss  on  note-holders  of  but  $240,000,  or  2^/2  per  cent, 
and  at  that  time  note-holders  did  not  have  a  first  lien 
on  assets.  The  Suffolk  Bank  system  was  an  excellent 
one,  and  thoroughly  stood  the  test  of  time. 

The  "  Canadian  Bank  Act "  of  1890  covers  forty 
pages  of  printed  matter.  (Our  own  National  Bank  Act 
and  amendments  cover  ninety-four  pages.)  The  old 
Safety  Fund  system  of  New  York  was  adopted  in 
Canada  in  1890,  in  order  to  secure  the  prompt  redemp- 
tion of  the  notes  of  failed  banks,  i.  e.,  to  avoid  a  dis- 
count on  the  notes  of  such  banks  pending  their 
liquidation.  Under  the  Canadian  system  the  circu- 
lating notes  are  the  first  lien  on  the  assets,  and  it  is 
believed  that  the  assets  will  always  suffice  to  redeem 
the  notes ;  but  the  delay  in  converting  them  into  cash, 


n6 

prior  to  the  establishment  of  the  Safety  Fund,  had  led 
to  a  temporary  discount  on  such  notes.  There  is  now 
in  the  Canadian  u  Bank  Circulation  Redemption  Fund  " 
Si, 800,000,  and  it  is  deemed  sufficient  to  meet  all  con- 
tingencies of  this  kind.  Under  the  Canadian  law  the 
Government  is  not  responsible  for  the  notes  of  failed 
banks,  but  such  notes  draw  interest  at  6  per  cent. 
The  maximum  amount  of  the  fund  is  5  per  cent  of 
the  outstanding  circulation  of  all  the  Canadian  banks, 
and  it  must  be  kept  up  to  this  maximum,  the  Minister 
of  Finance  having  power  to  call  on  the  banks  for  addi- 
tional contributions,  when  necessary,  not  exceeding  i 
per  cent  in  any  year.  When  the  assets  of  failed  banks 
are  paid  in,  however,  refunds  may  be  made  to  the  con- 
tributing banks  of  the  excess  over  5  per  cent.  The 
Canadian  system  embraces  40  banks,  with  460  branches. 

Regarding  the  Scotch  banking  system:  Without 
going  into  details  or  referring  to  the  various  acts  from 
the  time  of  Queen  Anne  down  to,  say,  the  beginning 
of  the  eighteenth  century,  it  is  sufficient  to  mention 
that  banking  companies,  with  numerous  partners,  have 
existed  for  a  long  period  in  Scotland.  The  Bank  of 
Scotland  was  established  in  1695,  the  Royal  Bank  of 
Scotland  in  1727,  and  the  British  Linen  Company  in 
1746.  What  is  in  general  called  the  Scotch  system 
may  be  said  to  have  been  inaugurated  about  1770,  or 
125  years  ago. 

In  1845  an  act  was  passed  relating  to  the  Scotch 
banks,  by  which  the  circulation  of  those  then  issuing 
notes  was  confined  to  the  average  output  of  each  for 
the  year  preceding  the  ist  of  May,  1845,  P^us  an 


n7 

amount  equal  in  any  one  month  to  the  average  amount 
of  gold  and  silver  coin  held  during  the  previous  month, 
as  shown  by  the  weekly  returns, — silver  to  be  not  more 
than  one-fourth  of  the  gold, — which  rule  holds  through- 
out Great  Britain.  These  banks  may  issue  notes  from 
one  pound  upward,  and  in  their  returns  have  to  dis- 
tinguish the  amount  of  notes  issued  of  five  pounds 
and  upward  from  those  issued  below  five  pounds.  If 
the  monthly  average  circulation  be  above  the  limit  of 
notes  and  coin  authorized,  the  bank  is  liable  to  forfeit 
a  sum  equal  to  such  excess. 

At  present  there  are  but  eleven  banks  of  issue  in 
Scotland,  but  these  have  numerous  branches,  extending 
to  almost  every  village  and  hamlet,  say  1,000  places. 
Their  notes  are  not  redeemable  except  at  the  parent 
banks.  The  issue  of  notes  by  the  parent  banks  not 
secured  by  coin  is,  in  round  figures,  fifteen  millions  of 
dollars,  and  the  average  of  gold  and  silver  coin  will 
probably  approximate  thirty-five  millions  of  dollars. 
Bank  of  England  notes  circulate  freely,  but  are  not  a 
legal  tender  there. 

There  have  been  only  three  bank  failures  in  Scotland 
of  any  importance  in  125  years, — those  of  the  Ayr 
Bank  in  1772,  the  Western  Bank  in  1857,  and  the 
City  of  Glasgow  Bank  in  1878. 

Any  one  of  the  foregoing  successfully  demonstrated 
systems,  or  the  Baltimore  or  Carlisle  plans  recently 
recommended,  is  worthy  of  serious  consideration  and 
adoption  by  our  people.  The  Baltimore  plan  dispenses 
with  bond  security  for  bank  notes,  and  substitutes 
therefor  a  guaranty  fund  equal  to  5  per  cent  of  all 


n8 

bank  notes  outstanding,  on  the  same  general  plan  as 
the  New  York  Safety  Fund  and  the  Canadian  "  Bank 
Circulation  Redemption  Fund."  It  restricts  note  issues 
to  50  per  cent  of  a  bank's  capital,  except  in  emergen- 
cies, when  they  may  be  increased  to  75  per  cent,  and 
the  Government  remains  responsible,  as  now,  for  the 
notes,  and  redeems  them  as  now,  having  the  guaranty 
fund  and  also  a  first  lien  on  the  assets  of  failed  banks 
and  on  the  shareholders'  liability,  together  with  the  5 
per  cent  redemption  fund  required  by  the  existing  law, 
and  the  power  to  tax  all  circulating  notes  at  the  rate  of 
one-half  per  cent  per  annum. 

Even  a  State  bank  system  might  be  preferable  to  the 
present  system,  because  there  is  no  reason  why  the 
admitted  evils  of  the  old  banking  system  could  not  be 
effectively  obviated,  and  such  proper  safeguards  estab- 
lished as  would  be  required  for  the  protection  of  the 
people.  For  instance,  by  uniformity  in  the  banking 
laws  of  the  several  States,  and  the  issue  of  all  notes 
redeemable  in  gold,  the  note-holder  being  secured 
by  proper  bond  deposits,  either  State  or  National. 
Another  way  would  be  to  provide,  without  bonds,  for 
the  issue  of  a  certain  percentage  of  notes,  so  redeem- 
able as  compared  with  the  paid-up  capital  of  the  bank, 
the  notes  being  a  first  lien  upon  the  bank's  assets  and 
stockholders'  liabilty  in  case  of  failure.  There  would 
be  no  greater  danger  of  the  revival  of  wild-cat  banks 
than  there  is  of  losses  under  the  present  patchwork 
system. 

A  most  important  fact,  that  ought  never  to  be  forgot- 
ten, is  that  the  banking  facilities  in  existence  in  the 


United  States  amount  to  some  five  thousand  three  hun- 
dred millions  of  dollars  in  paid-up  capital,  surplus  and 
deposits,  while  the  Government  currency  of  all  kinds  at 
present  in  existence  is,  say,  $830,000,000, — greenbacks, 
demand  notes,  silver  certificates,  etc.  The  National  banks 
have  out  only  $'200,000,000,  secured  by  bonds  on  a  capi- 
tal of  $660,000,000.  The  security  afforded  note-holders 
in  banking  operations  covers  but  a  fraction  of  the  risk 
to  the  depositors,  the  proportion  of  capital  employed  as 
compared  to  the  circulating  notes  being  approximately 
as  6  to  i.  A  National  bank  of  $100,000  capital  may 
fail  with  a  million  and  a  half  of  deposits,  and  for  this 
amount  there  is  no  guaranty  beyond  the  supposed  sol- 
vency of  the  stockholders  after  the  moiety  of  interest  in 
the  way  of  bank  notes  shall  have  been  provided  for. 
The  great  danger  lies  in  the  excessive  creation  of  bank- 
ing credits  which  the  Government  does  not  provide  for, 
and  upon  which  the  law  places  no  effective  limitations. 
The  writer  personally  knows  of  a  failed  National  bank, 
with  less  than  $50,000  outstanding  notes  to  redeem, 
losing  $90,000  by  discounting  drafts  for  one  cus- 
tomer. 

In  conclusion  I  repeat,  that  what  is  imperatively 
needed  is  not  more  money,  but  a  policy  of  monetary 
legislation  in  conformity  with  economic  laws  that  all 
human  experience  has  shown  to  be  certain  in  their 
action.  To  quote  Mr.  Brough: 

"  The  question  is  not  one  of  politics.  It  is  one  of 
science  and  ethics,  and  of  the  first  magnitude.  A  State 
wields  no  power  so  effective  to  lift  or  lower  the  morals 
of  a  people  as  its  monetary  legislation." 


I2O 

"  Westward  the  course  of  empire  takes  its  way."  In 
the  thirteenth,  fourteenth  and  fifteenth  centuries,  Italy 
(Venice  and  Florence)  was  the  center  of  exchanges  for 
the  commerce  of  Western  Europe ;  in  the  sixteenth, 
Flanders  (Antwerp  and  Bruges)  was  that  center ;  and 
in  the  seventeenth,  eighteenth  and  nineteenth,  England 
gradually  became  the  center  of  exchanges  for  the  world. 
But  in  each  case  it  grew  out  of  standards  of  value,  real 
or  ideal,  of  intrinsic  equivalency.  If  the  United  States 
of  America  be  true  to  the  teachings  of  history,  to 
common  sense  and  right,  it  may  gain  that  financial 
supremacy  in  the  twentieth  century ;  but,  if  so,  it  will 
have  to  be  through  the  gold  standard  and  a  reliable 
system  of  banking. 


THE  SILVER  QUESTION  AND   HARD  TIMES. 


following  articles,  published  in  the  San  Fran- 
A  cisco  News  Letter  over  the  signature  u  A  Lay  man,  " 
were  occasioned  by  a  series  of  papers  in  the  Overland 
Monthly  under  the  caption  of  "  Hard  Times,"  and  other 
contributions  to  that  periodical  upon  the  subject  of 
silver. 

[From  News  Letter,  February  29,  1896.} 

Editor  News  Letter  : 

SIR  :  Referring  to  an  article  in  the  Overland  Monthly 
for  the  present  month  of  February  by  Irving  M.  Scott, 
on  "  Hard  Times,"  I  turn  to  the  subject  to  point  out 
inaccuracies  of  assertions  made  by  Mr.  Scott,  in  the 
hope  that,  if  he  again  essays  to  advise  the  people  what 
to  do,  he  will  be  more  careful  about  his  statistics.  The 
following  occurs  in  his  article  : 

"  In  1889  the  silver  mines  of  the  United  States  yielded 
$64,800,000,  equal  to  two-thirds  of  the  silver  yield  of 
the  balance  of  the  world.  In  1894,  owing  to  the  great 
depreciation  in  the  price  of  silver,  many  of  our  silver 
mines  were  compelled  to  stop  work,  and  our  yield  of 
silver  was,  as  measured  in  gold,  $14,350,000.  The  in- 
dications are  that  the  silver  yield  of  our  mines  this  year 
will  not  exceed  $4,000,000.  Not  only  have  the  demon- 
etizing acts  with  respect  to  silver  reduced  the  world's 
redemption  money  fully  50  per  cent,  but  they  have  palsied 
its  powers  of  recuperation,  have  effected  a  scarcity  of 
money,  and  thereby  infested  our  country  }s  doors  with 
countless  packs  of  ravenous  wolves" 


122 

If  Mr.  Scott  had  referred  to  current  statistical  author- 
ity,— abstracts,  atlases,  government  bureau  reports,  or 
even  newspaper  almanacs, — he  could  have  materially 
lessened  the  surprising  inaccuracy  of  these  statements. 
He  says  the  yield  of  silver  as  measured  in  gold  was, 
for  1894,  $14,350,000.  As  a  matter  of  fact  it  was, 
measured  in  gold  (commodity  value),  in  round  figures 
approximately  $32,000,000;  in  1895,  $36,000,000.  He 
states  that  the  indications  are  that  the  yield  of  silver 
this  year  will  not  exceed  $4,000,000.  In  contradiction 
I  beg  to  offer  the  assurance  that  the  indications  are  that 
the  product  of  silver  in  the  United  States  for  this 
year  of  1896  will  approximate  $40,000,000,  commodity 
value. 

Mr.  Scott  takes  the  year  of  1889  as  a  criterion,  which 
I  accept,  and  will  mention  that  the  total  product  of  the 
Pacific  Coast  and  Rocky  Mountain  States  and  Terri- 
tories, gold,  silver,  copper  and  lead,  all  of  which  are  in 
the  aggregate  intimately  related  in  their  production 
throughout  that  section,  and  the  falling  off  in  commer- 
cial value  was  only  8  per  cent  in  1895  as  compared 
with  1889,  the  gold  product  of  the  same  localities  for 
,1895,  as  compared  with  1889,  showing  an  increase  of 
over  50  per  cent.  If  we  take  our  sister  republic  of 
Mexico  into  account,  we  find  that  the  total  product 
there  of  1889  was  $42,000,000,  gold  and  silver  combined, 
mintage  ratios  ;  and  for  1895  ^  was  $59,000,000,  an  in- 
crease in  the  six  years  of  42  per  cent.  The  production 
of  gold  alone  in  the  world  during  1895  was  very  con- 
siderably more  than  the  combined  product  of  gold  and 
silver  thirty  years  ago. 


123 

To  go  into  the  question  of  the  world's  product,  as 
Mr.  Scott  applies  his  argument  to  the  world  in  setting 
forth  what  he  deems  the  evils  of  the  gold  standard,  I 
have  to  say  that  we  find,  upon  reference  to  authorities, 
that  the  production  of  gold  (I  am  again  speaking  of 
gold  and  silver  as  commodities)  was,  in  1874,  $91,000,- 
ooo;  in  1876,  $104,000,000;  in  1878,  $119,000,000;  in 
1890,  $120,000,000;  in  1892,  $147,000,000;  in  1894, 
$180,000,000;  and,  in  1895,  $200,000,000,  breaking  all 
previous  records.  Silver  represented,  in  1870,  $51,000,- 
ooo;  in  1874,  $70,000,000;  in  1884,  $91,000,000;  in 
1894,  $106,000,000;  in  1895,  $110,000,000.  The  price 
of  silver  in  1889-90  was  artificial,  arising  from  the  then 
confident  fallacy  in  the  United  States  of  Government 
power  to  create  values  by  legislative  enactment. 

By  reference  to  pages  40  and  41  of  the  Report  for 
1895  °f  the  Director  of  the  United  States  Mint,  Mr. 
Scott  will  find  that,  of  the  $4,070,000,000  of  silver 
money  in  the  world,  $3,440,000,000,  or  85  per  cent, 
is  full  tender,  and  that  60  per  cent  of  that  is  in 
Oriental  lands.  But  the  status  does  not  confer  upon 
silver  there  any  greater  commodity  value  than  in  the 
United  States,  and  never  did.  Always  and  everywhere, 
from  the  dawn  of  history,  alongside  of  any  legal  ratio 
whatever  there  is  a  commodity  ratio  that  fixes  the  real 
value  of  the  metals. 

In  one  of  our  city  dailies  of  Monday,  the  24th,  a 
prominent  divine,  commenting  upon  the  moral  status 
of  San  Francisco  and  California,  indulged  in  extremely 
severe  reflections,  and,  if  Mr.  Scott's  assertion  regard- 
ing countless  packs  of  ravenous  wolves  infesting  our 


124 

country's  doors  is  accurate,  not  only  the  condition  of 
San  Francisco  and  California  but  the  entire  country 
is  certainly  very  deplorable.  He  may  well  cry  with 
Hamlet : 

"  The  time  is  out  of  joint.    Oh,  cursed  spite, 
That  ever  I  was  born  to  set  it  right !  " 

However,  I  am  not  disposed  to  take  so  pessimistic  a 
view  of  the  situation. 

Mr.  Scott  opens  and  closes  his  articles  with  the  fol- 
lowing quotation  from  Virgil : 

"To  the  shades  you  go  a  down -hill,  easy  way  ; 
But  to  return,  and  rejoin  the  day, 
That  is  a  work,  a  labor." 

Something  like  this  would  be  more  pertinent:  "  How 
difficult  it  is  to  get  back  to  the  path  of  truth  after 
floundering  in  the  slough  of  error." 

The  hard  times,  which  we  all  deplore  and  which  Mr. 
Scott  pathetically  bewails,  are  largely  the  legitimate 
results  of  pernicious  economic  methods  in  commerce 
and  finance,  namely,  of  the  delusion  that  the  Govern- 
ment can  create  value  by  statutory  enactment,  and  make 
the  people  rich  by  taxation.  Honesty,  patience,  hard 
work  and  frugal  economy  are  the  only  remedies  for  the 
ills  we  have  largely  drawn  upon  our  own  shoulders, 
and  which  we  must  bear  until  relieved  by  common-sense 
methods  of  our  own  devising.  As  Emerson  say^s,  "  We 
pay  a  price  for  everything  we  get." 

[From  News  Letter,  March  7,  1896.} 

Editor  News  Letter  : 

SIR  :     Recurring    to    Mr.  Scott's     article,     u  Hard 

Times,"    in    the    February  Overland,    he    takes,   for 

example,  the   year    1889  as  a   criterion,   which,    with 


"5 

corrections,  I  am  willing  to  accept.  He  states  the  silver 
output  of  the  world  for  that  year  at  $64,800,000,  which 
is  approximately  correct,  seeing  that  the  Director  of 
the  Mint  gives  it  at  $64,646,000.  But  note  the  method 
of  the  comparison  that  follows.  He  tells  us  that  "  in 

1894,  owing  to  the  great  depreciation  in  the  price  of 
silver,  many  of  our  silver  mines  were  compelled  to  stop 
work,  and  our  yield  of  silver  was,  as  measured  in  gold, 
$14,350,000."     Here  is  an  apparent  falling  off,  within 
the  five  years  embraced,  of  $50,450,000,  or  73  per  cent, 
which  is  scarcely  less  remarkable,  as   a  simple   state- 
ment of  fact,  than  his  estimate   for  the  current  year, 
which    he    places    at  $4,000,000,    though,    as  I  have 
already  stated,  we  have  indications,  from  the  output  of 

1895,  tnat  it  wiU  probably  be  $40,000,000. 

The  defect  of  this  comparison  arises  from  the  fact 
that  Mr.  Scott  states  the  output  of  silver  in  1889  at  its 
"coining"  value  of  $1.2929  per  fine  ounce,  while  he 
states  that  of  1894  at  its  "  commercial  "  value,  which 
averaged  for  that  year  less  than  64  cents  per  ounce. 
And,  even  at  that,  he  states  the  amount  inaccurately. 
As  given  above,  he  makes  it  $14,350,000,  whereas  the 
Director  of  the  Mint  gives  it  at  $31,422,000,  or  some- 
thing over  $17,000,000  more.  But  the  true  measure 
of  the  quantity  produced  is  its  weight  in  ounces  of 
pure  silver  and  not  its  value.  In  order  to  show,  there- 
fore, the  relative  output,  and  the  extent  to  which  the 
alleged  "  great  depreciation  "  of  silver  compelled  "  our 
miners  to  stop  work,"  I  give  below  the  actual  amounts 
as  stated  by  the  Mint  Director  : 

1889.. .Fine  ozs.,  50,000,000        Com.  value,  $46,750,000       Coining  value,  $64,646,000 
1894. .. Fine  ozs.,  49,500,000        Com.  value,  $31,422,000       Coining  value,  $64,000,000 


126 

It  will  thus  be  seen  that  the  falling  off  was  only 
500,000  ounces,  or  i  per  cent  of  the  mass,  while  the 
increase  of  gold  was  over  20  per  cent,  and  for  1895 
was  50  per  cent.  The  same  erroneous  form  of  state- 
ments is  observable  in  other  items.  He  tells  us,  for 
example,  that  from  1873  to  1892  the  world  produced 
$2,224,000,000  of  silver,  estimated  at  $1.29  per  ounce, 
but  that  "  demonetization  "  had  "  reduced  "  this  value, 
"  as  measured  in  gold,  50  per  cent,  and  had  reduced 
the  world's  entire  amount  of  silver  extant  nearly 
$2,000,000,000."  Now  the  table  from  which  Mr.  Scott 
apparently  takes  these  figures  shows  that  the  u  coin- 
ing "  value  of  the  silver  produced  from  1873  to  1892 
was  $2,322,339,700,  while  its  value,  "  as  measured  in 
gold,"  was  $1,916,402,800,  being  equivalent  to  a  dis- 
count of  $405,936,900,  or  171/2  per  cent,  instead  of  50 
per  cent,  making  a  difference  of  something  over  $755,- 
000,000. 

The  same  inaccuracy  is  apparent  in  his  methods 
of  stating  the  facts  concerning  the  output  of  gold. 
"  Let  us  not  forget,"  he  says,  "  that  the  yield  of 
gold  in  California  in  1851  was  $81,000,000,  and  in  the 
Colony  of  Victoria,  Australia,  in  1853  was  $62,000,000, 
and  that  these  countries  are  now  yielding  each  only 
$13,000,000.  Mr.  Scott,  of  course,  knows  that  in  1851 
California  practically  represented  the  whole  of  the 
United  States  as  to  its  gold  output,  as  in  1853  the 
Colony  of  Victoria  did  the  whole  of  Australasia.  Now 
in  1894,  according  to  the  Director  of  the  Mint,  the 
United  States  produced  $39,500,000  and  Australasia 
$41,760,000,  being  in  each  case  over  three  times  the 


I27 

amount  stated  by  him.  And  the  world's  present  product 
far  exceeds  all  previous  records.  But  perhaps  the  most 
remarkable  statement  of  all  made  by  him  in  this  con- 
nection is  to  the  effect  that  for  the  50  years,  from  1831 
to  1880,  the  world's  consumption  of  gold  "  by  the  arts 
and  manufactures  exceeded  its  production  $96,468,560." 

During  this  period  the  world's  output  of  gold  was 
$4,245,579,000,  and  of  silver  $2,370,343,000,  making  a 
total  of  $6,615,922,000.  If  he  will  refer  to  Mulhall's 
"  Dictionary  of  Statistics  "  under  article  "  Plate,"  he 
will  find  that  the  amount  of  these  metals  consumed 
in  the  arts  during  this  period,  in  Great  Britain  and 
France,  which  probably  represented  half  of  the  world's 
consumption,  did  not  amount  to  10  per  cent  of  the 
world's  produce.  (This,  however,  is  probably  too  low. 
It  is  various^  estimated  at  from  20  to  40  per  cent, 
some  even  higher.)  And  again,  if  he  will  refer  to  the 
same  work  under  the  head  of  "  Coin,"  he  will  find  that 
this  author  states  that  the  world's  stock  of  coin  in  1830 
was  ^313,000,000,  or  say  $1,565,000,000,  while  in  1880 
it  was  ^1,128,000,000,  or  $5,640,000,000,  an  increase 
of  ^815,000,000,  or  $4,075,000,000.  If,  then,  the  con- 
sumption in  the  arts  during  this  period  exceeded  the 
entire  production  by  $96,000,000,  as  Mr.  Scott  asserts, 
where  did  this  enormous  increase  of  "  coin "  come 
from  ?  It  must  be  remembered,  too,  this  is  not  only 
in  excess  of  the  consumption  of  the  arts  but  of  loss 
by  abrasion,  shipwreck  and  all  other  destructive  causes. 

Max  O'Rell  relates  a  story  of  an  American  visitor's 
description  of  things  seen  in  Paris  that  he  ought  not 
to  have  seen,  and  the  humorist,  after  intimating  each 


128 

questionable  view,  exclaims  comically,  "  Where  did  he 
go  ? "  After  reading  Mr.  Scott's  article  I  am  con- 
strained to  ask,  Wliere  did  he  go  in  his  little  journey 
into  the  world  of  economics  ? 

To  go  into  the  question  of  the  world's  precious-metal 
product,  and  of  the  influence  it  is  supposed  to  exert 
over  the  products  of  labor  and  industry,  I  have  not 
the  time  at  present.  But  as  the  evident  purpose  of 
Mr.  Scott's  article  is  to  show  that  existing  economic 
maladies  are  attributable  to  "  a  scarcity  of  money 
largely  due  to  the  demonetization  of  silver,"  and  "  as 
the  demonetization  of  silver  depreciated  its  value,  so 
remonetizing  it  will  appreciate  its  value," — if  there  is 
any  principle  of  economic  law  governing  such  phenom- 
ena, Mr.  Scott  would  undoubtedly  confer  a  lasting 
obligation  upon  many  earnest  inquirers  who,  like  my 
self,  have  been  groping  their  way  in  search  of  truth 
through  the  bewildering  maze  of  perplexing  phenomena 
which  surround  this  subject,  if  he  will  reconcile  his 
theories  of  "  Hard  Times  "  as  a  result  of  the  scarcity 
of  money  with  the  history  of  financial  and  industrial 
phenomena  for  the  last  forty  odd  years.  And  to  assist 
him  in  such  a  task  I  will  here  furnish  the  necessary 
data  so  far  as  it  relates  to  the  "  supply  "  of  the  precious 
metals  to  the  Western  world  during  this  period,  which 
approximately  represents  the  "  supply "  of  metallic 
money  and  its  supposed  effect  upon  "  prices "  and 
"  general  prosperity,"  only  adding  in  advance  that,  so 
far  as  this  country  is  concerned,  the  amount  of  money 
per  capita  at  the  important  dates  within  this  period  was, 
in  1851,  $13.76;  1873,  $18.58;  and  in  1896,  $31.20. 


129 

Period  of  High  Prices,  1851  to  1865,  15  years. 

World's  produce  of  gold  $i»947>925,ooo 

World's  produce  of  silver   $601,122,000 

Less  exports  to  Orient 752,948,675  loss          151,826,675 

Gold  and  silver  "  stocked  "  by  Western  nations $1,796,098,325 

Average  per  annum 119,739,888 

Period  of  Falling  Prices,  1866  to  1894.,  29  years. 

World's  produce  of  gold $3,494,463,000 

World's  produce  of  silver $3,419,450,000 

Less  exports  to  the  Orient 1,005,009,790  2,414,340,210 

Gold  and  silver  "stocked "  by  Western  nations $5,908,803,219 

Average  per  annum 203,751,835 

Average  per  annum  1851  to  1865,  as  above 119,739,888 

Increase  per  annum  (70  per  cent) 84,011,947 

Increase  population   per  annum    (i  per  cent). 

When  Mr.  Scott  shall  have  answered  these  and  other 
queries  already  propounded  in  my  article  in  your  issue 
of  February  29th,  I  shall  be  willing  to  offer  more  for  his 
consideration.  In  the  meantime  I  ask  him  to  consider 
Lord  Macaulay's  observation  on  King  James'  luckless 
experiment  in  brass  money  for  Ireland,  as  follows : 
"Public  prosperity  could  be  restored  only  by  the 
restoration  of  private  prosperity,  and  private  prosperity 
could  be  restored  only  by  years  of  peace  and  security," 
and,  I  will  add,  by  honest,  patient  industry  and  frugal- 
ity, and  offer  the  suggestion  that  a  Government  cannot 
enrich  its  people  by  taxation,  nor  create  values  by  leg- 
islative enactment. 

[From  News  Letter,  June  20,  i8y6.] 

Editor  News  Letter  : 

SIR  :  As  an  American  writer  has  recently  said  in  a 
comparison  of  the  past  with  the  present,  not  only  are 
we  disposed  always  to  look  upon  the  past  as  a  some- 
what Arcadian  period, — a  period  in  which  life  and 
manners  were  better  and  more  genuine  than  they 
now  are,  and  as  a  sort  of  Golden  Era  when  compared 


I30 

with  the  present, — but  there  is  usually  a  sense  of 
reverence,  of  filial  piety,  connected  with  it.  Like 
Shem  and  Japhet,  approaching  with  averted  eyes,  we 
are  disposed  to  cover  up  with  a  garment  the  nakedness 
of  the  progenitors ;  and  the  searcher  after  truth,  who 
wants  to  have  things  appear  as  they  were,  and  does 
not  believe  in  the  suppression  of  evidence,  is  apt  to 
be  looked  upon  as  a  personage  of  no  discretion  and 
doubtful  utility. 

A  two  and  a  half  months'  absence  from  the  State 
has  prevented  an  earlier  reference  to  Mr.  Scott's 
rejoinder,  in  the  May  Overland,  to  A  Layman's  com- 
ments on  the  statements,  inferences  and  conclusions 
in  the  "  Hard  Times  "  series  of  articles.  The  article 
referred  to  abounds  in  errors,  but  the  minor  ones  will 
be  passed  over,  because  the  more  important  are  all 
that  A  Layman  has  time  to  deal  with. 

In  the  number  of  the  Overland  mentioned,  Mr.  Scott 
says : 

"  Charity  suggests  that  Layman  may  be  '  mad.'  If 
he  be  so,  it  would,  in  view  of  his  utterances  as  to  the 
power  of  Government  to  create  value  by  statutory 
enactment,  seem  the  acme  of  hyperbole  to  say,  *  much 
learning  doth  make  thee  mad  !' ' 

And  he  otherwise  disposes  of  A  Layman's  views  with 
a  breezy  assertion  not  unlike  that  displayed  by  Mark 
Twain  when  he  told  an  audience  that  he  had  selected 
for  discussion  a  subject  with  which  he  was  not  familiar 
so  that  he  might  treat  it  unrestrainedly.  As  who 
should  say : 

"  I  am  Sir  Oracle,  supreme  and  infallible ; 
And  the  things  I  don't  know,  those  things  are  not  valable." 


As  to  the  power  of  Government  to  create  value  by 
legal  enactment, — fiat, — A  Layman's  conception  of 
which  Mr.  Scott  thinks  so  feeble,  amongst  economists 
of  distinction  it  is  accepted  as  an  axiom  that  law 
cannot  create  value,  and  no  international  bimetallists 
even,  of  repute,  claim  that  power  for  Government ; 
they  admit  the  contrary,  but  contend  that  Government 
can  set  in  motion  economic  forces  that  will  control 
value  by  controlling  supply  and  demand, — thus  in 
regard  to  silver  upon  the  theory  of  general  concurrence 
by  the  powers  of  the  world.  Archbishop  Walsh,  in 
his  book  on  international  bimetallism,  says  :  "  While 
legislation  cannot  directly  give  value  to  a  thing,  it  can 
do  so  indirectly  :  it  can  set  up  a  demand  which  is  one 
of  the  factors  of  value ;"  and  Prof.  Andrews,  in  his 
"  Honest  Dollar,"  says  that  "  While  law  cannot  control 
value  independently  of  supply  and  demand,  it  can  set 
free  an  economic  force  which  will  largely  control  supply 
and  demand  themselves."  They  distinctly  declare  that 
unlimited  free  coinage  by  any  one  Government  would 
be  disastrous.  I  have  hitherto  sufficiently  shown  that 
coinage  does  not  operate  as  demand  in  its  economic 
sense, — which  implies  a  destruction  of  the  material 
involved, — but  is  simply  a  hoarding  of  the  metal.  And 
it  is  certain  that  every  attempt  of  Government  to  confer 
upon  money  a  value  at  variance  with  the  commercial 
value  has  proved  futile  through  all  time.  If  my  con- 
ception of  this  fact  indicates  lack  of  learning,  I  am 
nevertheless  in  noble  company, — Oresme,  Copernicus, 
Gresham,  Locke,  Newton,  Liverpool,  Franklin,  Morris, 
Hamilton,  Jefferson,  and  other  illustrious  names. 


132 

I  have  no  desire  to  commit  Mr.  Scott  to  something  he 
does  not  believe  in.  If  he  is  not  in  favor  of  the  inde- 
pendent, unlimited  free  coinage  of  silver  by  the  United 
States,  I  misconstrue  his  articles.  If  he  is  I  do  not, 
and  am  not  alone.  The  construction  placed  upon  them 
is  shared  by  others  familiar  with  the  subject.  If  he 
is  for  free  coinage  and  only  objected  to  the  ratio  I 
named, — 16  to  i, — what  ratio  does  he  favor?  Within 
the  century  the  commercial  ratio  has  varied  from  about 
15  to  i  to  34  to  i.  Can  a  ratio  be  made  which  will 
measure  all  values  and  all  debts  and  all  credits  on  the 
basis  of  a  fluctuating  value  like  that  ? 

As  to  the  concurrent  use  of  gold  and  silver  in  the 
United  States  from  1687  to  1873,  which  Mr.  Scott 
alleges  :  If  there  was  any  appreciable  current  use  in 
this  country  of  either  gold  or  silver  in  the  seventeenth 
century,  I  have  not  found  it  recorded  in  history. 
Wampum,  warehouse  receipts,  etc.,  were  currency, 
beaver  skins,  corn,  tobacco,  rice,  etc.,  were  money  of 
redemption,  and  pounds,  shillings  and  pence  the  money 
of  account,  or  book  money,  and  so  continued  until  well 
on  into  the  eighteenth  century.  Mr.  Jefferson,  in  1805, 
discontinued  the  coinage  of  the  silver  dollar  provided 
for  by  law  in  1792,  because  depreciated  foreign  coins 
expelled  the  American  coins,  and  for  over  thirty  years 
not  a  dollar  was  issued.  Our  currency  was  either  the 
paper  of  State  banks,  fractional  coins,  or  depreciated 
foreign  silver  coins.  The  ratio  of  silver  to  gold, 
1792-1805,  drove  gold  out  of  circulation,  and  the 
depreciated  foreign  silver  coins  in  turn  drove  the 
United  States  silver  coins  out.  Here  we  have  the 


133 

Gresham  Law  in  duplex  action.  Hence  Mr.  Jefferson's 
order  of  1805  to  discontinue  the  coinage  of  silver  dol- 
lars. For  the  baneful  effects  of  depreciated  money  in 
the  United  States,  see  McMasters'  History  of  the 
American  people,  wages,  and  prices  of  commodities, 
from  1770  to  1800.  In  Great  Britain,  by  proclamation 
and  mercantile  concurrence,  gold  became  the  money  of 
commerce  in  1717,  and  has  remained  so  for  180  years. 

Mr.  Scott  reiterates  his  error  regarding  gold  and 
silver, — that  "A  greater  production  of  one  or  the  other 
did  not  affect  the  parity  established  between  them 
and  that  from  time  immemorial  gold  and 
silver  worked  together  harmoniously," — and  of  A 
Layman's  statement,  that  "  Gold  and  silver  never  have 
circulated  freely,  concurrently  and  indiscriminately  as 
coins  at  fixed  ratios  as  legal  tender  under  unrestricted 
coinage."  He  asserts  that  it  "  seems  random  and  in 
conflict  with  the  facts." 

On  page  526  Mr.  Scott  says : 

"In  1834,  on  account  of  the  greater  cost  attending  the 
coinage  of  silver  than  gold  of  equivalent  value,  Con- 
gress made  the  ratio  of  silver  to  gold  16  to  i." 

What  is  Mr.  Scott's  authority  for  that  statement  ?  It 
was  the  failure  to  circulate  concurrently  that  caused 
the  change  to  gold.  The  Congressional  Committee 
appointed  to  investigate  the  subject  reported  as  follows. 
The  first  report  of  1831  says  : 

"  That  there  are  inherent  and  incurable  defects  in 
the  system  which  regulates  the  standard  of  value  of 
both  gold  and  silver,  its  instability  as  a  measure  of 
contracts  and  mutability  as  the  practical  currency  of  a 
particular  nation,  are  serious  imperfections,  while  the 


134 

impossibility  of  maintaining  both  metals  in  concurrent, 
simultaneous  or  promiscuous  circulation  appears  to  be 
as  clearly  ascertained. 

u  That  the  standard  being  fixed  in  one  metal  is  the 
nearest  approach  to  invariableness,  and  precludes  the 
necessity  of  further  legislative  interference." 

The  second  report  of  1832  says : 

"  If  both  metals  are  preferred,  the  like  relative  pro- 
portion of  the  aggregate  amount  of  metallic  currency 
will  be  possessed,  subject  to  frequent  changes  from  gold 
to  silver,  and  vice  versa,  according  to  the  variations  in 
the  relative  value  of  these  metals.  The  Committee 
think  that  the  desideratum  in  the  monetary  system  is 
the  standard  of  uniform  value ;  they  cannot  ascertain 
that  both  metals  have  ever  circulated  simultaneously, 
concurrently  and  indiscriminately  in  any  country  where 
there  are  banks  or  money  dealers,  and  they  entertain 
the  conviction  that  the  nearest  approach  to  an  invari- 
able standard  is  its  establishment  in  one  metal,  which 
metal  shall  compose  exclusively  the  currency  for  large 
payments." 

That  is  to  say,  standard  money,  money  of  commerce. 
This  conclusion  is  impregnable. 

Congress,  in  the  acts  of  1834-37,  designed  to  make 
the  ratio  such  that  gold  would  remain  in  this  country, 
whether  under  it  we  could  keep  silver  or  not.  This  is 
familiar  history.  The  object  of  this  change  was  dis- 
tinctly stated,  especially  by  Mr.  Benton,  who  said  : 

u  To  enable  the  friends  of  gold  to  go  to  work  at  the 
right  place  to  effect  the  recovery  of  that  precious  metal 
which  their  fathers  once  possessed ;  which  the  citizens 
of  European  kings  now  possess ;  which  the  citizens  of 
the  young  republics  to  the  south  all  possess  ;  which 


even  the  free  negroes  of  San  Domingo  possess  ;  but 
which  the  yeomanry  of  this  America  have  been  deprived 
for  more  than  twenty  years,  and  will  be  deprived  for- 
ever unless  they  discover  the  cause  of  the  evil,  and 
apply  the  remedy  to  its  root." 

The  official  reports  of  French  Government  Com- 
mittees subsequently  investigating  the  subject  for  France 
were  as  follows.  I  extract  from  Professor  Laughlin : 

"  An  official  document  issued  by  the  French  Gov- 
ernment in  1872  says  that  in  1808  the  circulation 
in  France  was  only  about  eight  million  francs  of  gold 
and  two  million  of  silver.  In  1838  the  whole  of  the 
French  circulation  did  not  include  over  five  per  cent  of 
gold  out  of  the  total  circulation  of  forty  millions  ;  that 
is,  silver  had  driven  out  gold,  because  they  were  not  at 
a  parity. 

"  The  same  document  says  that,  since  the  law  of  1803, 
France  has  had  no  gold  monetary  circulation  during 
the  period  before  1850.  Up  to  that  time  silver  was 
our  sole  monetary  circulation,  but,  after  the  gold  dis- 
coveries of  California  and  Australia,  gold  took  the  place 
of  silver  in  the  general  monetary  circulation  of  the 
country. 

"Again,  in  the  report  issued  by  the  Minister  of 
Finance  in  1869,  it  is  stated  that  in  1843,  out  °f  fifty- 
three  million  francs  then  possessed  by  the  banks,  only 
one  million  francs  were  gold.  This  metal  had  dis- 
appeared from  1803  to  1848,  because  it  had  enjoyed  a 
premium  which  reached  at  that  time  i^  Per  cent." 

There  are  numerous  references  of  the  same  kind  to 
show  that  not  in  France  was  there  a  concurrent  cir- 
culation of  gold  and  silver,  for  the  reason  that  the  two 
were  not  kept  at  a  parity.  Every  student  of  our  own 


136 

monetary  system  knows  perfectly   well  that  the  same 
was  true  of  the  United  States. 

Says  Prof.  Francis  A.  Walker,  the  ablest  interna- 
tional bimetallist  in  the  United  States  : 

"  We  flatly  deny  that  bimetallism  necessarily  involves 
the  concurrent  circulation  of  the  two  metals.  There  is 
some  reason  to  believe  that  the  French  statesmen  of 
1803  really  expected  that  concurrent  circulation  would 
result ;  but  no  bimetallist  nowadays  makes  the  concur- 
rent circulation  of  the  two  metals  in  the  same  country 
a  necessity  of  that  system." 

Says  ex-Secretary  of  the  Treasury  John  Sherman : 

"  The  two  metals,  as  metals,  never  have  been,  are  not 
now,  and  never  can  be,  kept  at  par  with  each  other  for 
any  considerable  time  at  any  fixed  ratio." 

As  already  stated,  even  the  bimetallists  do  not  claim 
that  the  two  metals  did  or  would  circulate  simulta- 
neously, concurrently  and  indiscriminately.  Mr. 
Scott's  quotation  of  the  law  of  1792  fixing  ratios  only 
serves  to  make  more  manifest  the  weakness  of  his 
position.  Gold  was  driven  out  from  1792  to  1834; 
standard  silver  was  driven  out  in  1834,  until  Govern- 
ment coinage  began  in  1878.  Not  only  was  the  law  of 
1792,  as  others  of  like  character  passed  in  the  United 
States,  futile,  but  those  of  Europe  also ;  and  in  Europe 
they  had  been  issuing  similar  kingly  decrees  for  five 
hundred  years,  every  one  of  which  was  as  impotent  as 
every  other. 

Alongside  of  Government  or  legal  ratios  there  is 
always  a  commercial  ratio  that  governs  the  purchasing 
power  of  money. 


[From  News  Letter,  June  27,  1896.] 

Editor  News  Letter  : 

SIR  :  Recurring  to  the  u  Silver  Question  "  and  the 
"  Hard  Times  "  articles,  which  "  A  Layman  "  discusses 
from  a  purely  historical  and  economical  standpoint, 
Mr.  Scott  says  :  "  From  1687  to  1873 — one  hundred 
and  eighty-six  years — our  country  employed  both  the 
silver  and  the  gold  dollar,  equal  one  to  the  other  as  a 
standard  of  value  and  redemption  money"  Where  did 
the  gold  dollars  come  from  previous  to  1785  ?  Pounds, 
shillings  and  pence  were  our  money  of  account  np  to 
that  date,  two  years  after  the  independence  of  the 
United  States  was  acknowledged.  And  it  is  estimated 
that  at  the  time  of  the  Revolutionary  War  there  was 
not  $i  per  capita  of  gold  and  silver  in  the  country. 
As  to  the  circulation  of  gold  and  silver  in  Europe  at  a 
parity,  if  Mr.  Scott  were  familiar  with  his  subject  he 
would  know  that  in  the  larger  commerce  of  Europe 
and  the  world  the  two  metals  passed  by  weight  and  not 
by  tale.  That  is,  they  were  subject  to  the  mercantile 
value  of  money,  as  they  are  now  in  international 
commerce. 

Mr.  Scott,  with  all  the  naivete  of  "  Coin's  Financial 
School,"  says  :  "  During  a  period  of  186  years  the  com- 
mercial ratio  of  silver  to  gold  was  never  below  14.14, 
nor  above  16.25."  This  is  a  variation  of  14  per  cent. 
Inconsiderable  it  was  not.  It  was  always  easily  suffi- 
cient to  exclude  from  current  circulation  one  or  the 
other  metal  in  the  United  States,  as  well  as  in  France 
and  elsewhere.  But,  no  matter  what  the  ratios  were, 
the  metals  would  not,  never  have,  and  never  will, 


138 

• 

circulate  freely,  concurrently  and  indiscriminately  as 
legal-tender  coins  under  unrestricted  coinage,  except 
momentarily  when  crossing  each  other  in  their  oscilla- 
tions. Why  ?  Because  always  and  everywhere,  since 
the  dawn  of  civilization,  commercial  ratios  have  gov- 
erned the  coinage  ratios  in  the  purchasing  power  of 
coins,  and  the  undervalued  coin  always  goes  to  the 
melting  pot,  is  hoarded  or  exported,  while  the  over- 
valued is  forced  into  circulation.  Again,  why  ? 
Because  there  is  a  margin  of  profit  in  such  disposi- 
tion,— brokerage.  This  is  the  Gresham  Law.  To  quote 
the  Due  de  Noailles  on  the  "  Future  of  Bimetallism  :  " 
u  Who  would  not  revolt  at  the  idea  of  decreeing 
the  obligatory  equivalence  of  two  constant  quantities 
of  wheat  and  oats,  of  cotton  and  wool,  or  iron  and 
lead?  Under  such  conditions  no  honest  transaction 
would  be  possible,  each  of  these  several  products  being 
affected,  respectively,  by  dissimilar  and  variable  rises 
and  falls.  The  force  of  solidarity  of  the  products 
would  cause  inevitable  injustice  in  exchanges.  Why 
should  an  obligatory  equivalence  between  two  deter- 
minate weights  of  gold  and  silver  be  more  practicable 
or  more  legitimate  ?  " 

"  Value  knows  its  own  laws,  and  follows  them 
despite  kingly  decrees  or  legal  enactments."  This 
was  the  reason  why  Great  Britain  followed  the  Petty 
theory  in  her  legal  action  in  1815,  subordinating  silver, 
and  why  the  United  States,  in  1853  an(^  J873,  did  the 
same.  This  reason  for  our  legislation  in  1853  was 
publicly  stated  in  Congress  by  Dunham  of  Indiana, — 
because  the  only  feasible  bimetallism  is  gold  as  stand- 
ard, silver  as  subsidiary  or  auxiliary.  (But  the  latter 


139 

is  justifiable  and  efficient  only  to  such  an  extent  cts  the 
people  will  actually  use  it ;  beyond  this  it  is  a  waste  of 
capital^)  Alexander  Hamilton  said  : 

"  There  can  hardly  be  a  better  rule  in  any  country 
for  the  legal  than  the  market  proportion.  The  pre- 
sumption in  such  case  is  that  each  metal  finds  its  true 
level  according  to  its  intrinsic  utility  in  the  general 
system  of  money  operation." 

Hamilton  also  declared  that,  if  the  two  metals  at  any 
time  were  separated,  the  more  valuable  one  must  be  the 
standard,  for  the  reason  that  the  fluctuations  would  be 
more  likely  to  attach  to  the  inferior ;  and  he  endeavored 
to  adopt  as  the  legal  ratio  the  then  commercial  ratio 
between  the  two  in  the  market  of  the  world.  To  use 
his  exact  language  : 

"  As  long  as  gold,  either  from  its  intrinsic  superiority 
as  a  metal,  from  its  rarity,  or  from  the  prejudices  of 
mankind,  retains  so  considerable  a  pre-eminence  in 
value  over  silver  as  it  has  hitherto  had,  a  natural  con- 
sequence of  this  seems  to  be  that  its  condition  will  be 
more  stationary.  The  revolutions,  therefore,  which 
may  take  place  in  the  comparative  value  of  gold  and 
silver  will  be  changes  in  the  state  of  the  latter  rather 
than  in  that  of  the  former." 

In  discussing  monetary  matters  Thomas  Jefferson 
said,  as  all  the  world's  statesmen  have  said  before  and 
since,  that  the  question  of  the  difference  between  the 
value  of  gold  and  silver  as  money  was  purely  a  com- 
mercial question.  It  did  not  depend  on  legislation,  or 
the  fancy  and  taste  of  men,  but  on  commerce,  which 
regulates  the  price  of  commodities,  and  that  "the 
whole  art  of  Government  consists  in  the  art  of  being 
honest." 


If  Silver  as  standard  money  is  now  going  out  of  use 
in  a  natural  way  we  cannot  stop  it,  and  the  attempt  to 
do  so  can  only  involve  us  in  trouble.  Moreover,  the 
change  is  only  a  part  and  parcel  of  the  vast — incalcu- 
lable— economic  change  that  modern  invention  and 
productivity  have  wrought  within  thirty  years. 

"  The  productive  appliances  of  modern  invention  have 
put  in  operation  forces,  the  magnitude  of  which  we 
have  not  yet  learned  how  to  estimate,  which  we  are  not 
yet  able  to  control,  and  the  drift  and  final  outcome  of 
which  we  are  unable  to  forecast.  The  expansion  of 
productive  force  and  mechanism  has  been  so  gigantic  as 
to  carry  our  capacity  of  output  beyond  our  capacity  of 
appropriation.  The  effects  of  these  new  conditions 
have  been  unforeseen ;  and  we  have  sought  to  protect 
ourselves  against  their  consequences,  when  they  have 
appeared,  by  extemporized  expedients,  regardless  of 
fundamental  economic  principles  and  of  the  maxims 
which  experience  has  shown  to  be  wise  and  safe  under 
any  and  all  conditions" 

Of  this  more  anon. 

"  Layman  "  said  in  substance  that  the  independent, 
unlimited  free  coinage  of  silver  by  the  United  States 
would  be  especially  disastrous  to  wage-earners  and 
depositors  in  savings  banks.  Mr.  Scott  remarks,  u  Lay- 
man seems  to  conjure  up  a  fallacy,  and  then  cries  out 
against  the  creature  of  his  own  imagination,"  and  Mr. 
Scott  asserts  that  "  the  country  demands  the  remone- 
tization  of  silver."  The  State  Conventions  favoring 
silver — including  the  California  Republicans  and  Dem- 
ocrats— have  named  the  ratio  of  16  to  i.  At  this  ratio 
it  would  be  silver  monometallism,  with  a  fifty-cent 


V 


dollar;  and,  as  to  the  status  under  such  conditions, 
41  Layman,"  being  a  gold-standard  Democrat  of  the 
straightest  sect  of  Jefferson,  Jackson,  Benton,  Tilden 
and  Cleveland,  will  offer  Republican  testimony :  Said 
Senator  Sherman  of  Ohio,  in  the  United  States  Senate, 
February  ayth : 

"  I  believe  in  the  use  of  both  metals  to  as  great  an 
extent  as  is  possible,  at  the  same  time  maintaining 
their  parity.  In  this  country  to-day  the  laboring  man 
receives  a  dollar  equal  to  gold  worth  100  cents.  But 
with  free  silver  dollars  the  laboring  man  would  be 
cheated  of  one-half  of  his  dollar.  The  people  are  begin- 
ning to  understand  this.  They  are  beginning  to  learn 
that  free  silver  coinage  means  cheating  the  creditors 
out  of  one-half  their  dues.  The  maintaining  of  both 
metals  as  money  should  be  such  that  each  would  be 
equal  to  the  other.  That  would  be  true  bimetallism. 
The  adoption  of  free  silver  means  silver  monometallism, 
with  half  depreciated  silver  coin." 

Andrew  Carnegie  of  Pennsylvania  is  reported  in  the 
Iron  Age  for  May  as  follows : 

UQ.  Do  you  attribute  the  great  depression  and  panics 
that  have  occurred  in  the  last  few  years  to  the  agitation 
for  a  reduction  in  the  standard  of  value  ? 

"  A.  I  do.  All  other  causes  combined  have  not 
affected  the  country  to  the  extent  that  this  has.  It  is 
fundamental ;  nothing  is  settled  unless  this  is  settled, 
and  no  genuine  prosperity  is  possible.  Capital  at 
home,  equally  with  capital  abroad,  has  become  alarmed. 
It  has  run  into  its  hole,  and  will  not  come  forth  to 
embark  in  enterprises  which  create  prosperity  until  it 
is  settled  that  the  American  people  borrowing  $i  in 
gold  will  return  $i,  and  not  seek  to  defraud  their  cred- 
itors by  returning  a  dollar  worth  only  fifty  cents." 


142 

Said  ex-Senator  Platt  of  New  York,  in  the  Sun  of 
May  nth : 

"  The  people  of  this  country  have  had  enough  of  the 
attempt  to  force  fifty  cents  worth  of  silver  into  circula- 
tion as  a  dollar.  They  have  suffered  incalculable  losses 
as  the  result  of  twenty  years  of  that  policy.  Every 
business  man  knows  that  the  line  has  got  to  be  drawn 
sharply  and  distinctly  against  every  public  man  whose 
words  threaten  the  country  and  its  business  interests 
with  any  further  debasement  of  the  currency,  or  with 
any  more  of  those  losses  and  sacrifices  which  have  fol- 
lowed every  effort  to  force  silver  upon  the  country." 

Marvin  Hughitt  of  Illinois  said  at  Chicago,  May  3oth 

"  There  can  be  no  broad  business  development  while 
the  outlook  of  business  men  cannot  go  further  than  the 
gold  reserve  of  the  United  States  Treasury. 

"  Until  we  can  look  beyond  that  there  is  no  need  of 
expecting  any  widespread  improvement  in  general  busi- 
ness. The  indications  in  some  ways  seem  to  be  most 
encouraging  to  those  who  are  looking  for  an  early  set- 
tlement of  the  currency  question. 

aWhen  such  States  as  North  Dakota  and  South 
Dakota  declare  emphatically  for  a  gold  standard,  there 
is  reason  to  believe  that  we  are  getting  through  the 
process  which  a  country  with  a  government  like  ours 
must  go  through  from  time  to  time  ;  that  we  are  coming 
to  our  senses. 

"  On  the  other  hand  the  Democratic  party  in  this  great 
State  of  Illinois  appears  to  be  dominated  by  men  who 
want  to  pay  their  obligations  with  fifty-cent  dollars." 

In  March  the  Secretary  of  the  National  Transporta- 
tion Association  of  America  spoke  at  Chicago  as  fol- 
lows : 


"  Anything  less  than  sound  money,  good  everywhere 
on  earth  for  its  face,  as  the  basis  of  our  promise  to  pay, 
is  either  a  fraud,  a  subterfuge,  a  financial  cowardice,  or 
a  deliberate  attempt  to  conceal  the  truth,  or  to  stifle  the 
financial  conscience  of  the  nation  by  shouts  and  appeals 
of  demagogues,  whose  constituents  pretend  to  fancy  that 
fifty  cents  worth  of  something  will  buy  a  hundred  cents 
worth  of  anything." 

Says  Murat  Halstead : 

"  The  silver  controversy  is  unworthy  the  intelligence 
and  the  integrity  of  the  American  people.  This  free 
coinage  of  silver  policy  is  a  poor,  shabby,  half-way 
proposition.  It  is  a  fifty-cent  repudiating  dodge,  or  it 
is  sheer  craziness.  If  it  does  not  mean  to  settle  at  fifty 
cents  on  the  dollar,  what  is  it  fit  for  ?  Outside  of  this 
country,  in  the  gold  countries  no  one  advocates  what 
we  call  free  coinage.  Such  madness  of  misinformation 
is  not  conceived  of  elsewhere." 

In  consonance  with  the  foregoing  views,  the  Repub- 
lican party,  in  National  Convention  assembled  at  St. 
Louis,  June  lyth,  declared  as  follows  : 

"  We  are  unalterably  opposed  to  every  measure  calcu- 
lated to  debase  our  currency  or  impair  the  credit  of  our 
country.  We  are,  therefore,  opposed  to  the  free  coinage 
of  silver,  except  by  international  agreement  with  the 
leading  commercial  nations  of  the  world,  which  we 
pledge  ourselves  to  promote,  and  until  such  agreement 
can  be  obtained  the  existing  gold  standard  must  be  pre- 
served. 

"  All  our  silver  and  paper  currency  must  be  main- 
tained at  parity  with  gold,  and  we  favor  all  measures 
designed  to  maintain  inviolably  the  obligations  of  the 
United  States,  and  all  our  money,  either  coin  or  paper, 
at  the  present  standard,  the  standard  of  the  most 
enlightened  nations  of  the  earth." 


144 

What  is  the  present  or  existing  gold  standard  ? 
Although  the  Revised  Statutes  and  Statutes  at  Large 
direct  the  issue  and  prescribe  the  uses,  more  or  less 
limited,  of  several  kinds  of  currency,  to  but  one  do 
they  assign  the  office  of  a  standard.  To  but  one  dollar 
do  they  assign  the  function  of  a  unit  of  value.  The 
function  of  a  gold  dollar  as  the  unit  of  value  is,  there- 
fore, unqualified  and  unquestionable.  Its  value  is  the 
unit  of  value.  Its  measure  is  made  the  only  measure. 
To  that  measure  every  other  dollar  must  conform, 
while  other  dollars  exist,  and  this  law  of  Congress 
stands. 

[Front  News  Letter,  July  4,  1896.} 

Editor  News  Letter  : 

SIR:  I  have  said  in  these  papers  that  the  subject 
will  be  discussed  by  me  from  a  purely  historical  and 
economical  standpoint,  and  in  doing  so  I  shall  fre- 
quently use  the  phraseology  of  standard  authorities 
without  in  each  and  every  case  indicating  the  fact  by 
quotation  marks. 

In  the  May  Overland  Mr.  Scott  says  : 

:<  The  money  lenders,  money  gamblers,  etc.,  might 
perchance  be  adversely  affected  by  the  establishment  of 
bimetallism." 

(Meaning,  I  assume,  the  independent,  unlimited  free 
coinage  of  both  gold  and  silver  as  legal  tender  at  fixed 
ratios.)  France  holds  as  much  silver  as  the  United 
States,  and  the  ratio  there  is  15^  to  i,  but  free  coinage 
was  long  ago  discontinued  by  France,  and  she  declines 
to  resume,  maintaining,  however,  restricted  silver  circu- 
lation, practically  on  the  Petty  system  or  theory.  If 


the  United  States  accords  independent,  free  and  un- 
limited coinage  of  silver,  gold  will  be  driven  out  of  cur- 
rent circulation ;  and,  with  the  parting  of  the  two  coins 
in  circulation, — after  the  monetary  panic  is  over,  after 
the  financial  wreck, — comes  the  wreckage,  comes  the  op- 
portunity of  the  money  brokers,  u  money  gamblers," 
etc.,  at  the  expense  of  the  people.  Vide  greenbacks,  gold 
and  silver,  1862  to  1878. 

Let  it  never  be  forgotten  that  a  coin  is  just  as  bad 
when  debased  by  overvaluation,  if  not  exchangeable  for 
better,  as  when  unduly  alloyed,  clipped  or  sweated. 

Adam  Smith  sets  forth  the  condition  of  Hamburg, 
1609,  as  follows : 

"  Before  1609  the  great  quantity  of  clipped  and  worn 
foreign  coin,  which  the  extensive  trade  of  Amsterdam 
brought  from  all  parts  of  Europe,  reduced  the  value  of 
its  currency  about  nine  per  cent  below  that  of  good 
money  fresh  from  the  mint. 

"  Such  money  no  sooner  appeared  than  it  was  melted 
down  or  carried  away,  as  it  always  is  in  such  circum- 
stances. The  merchants,  with  plenty  of  currency, 
could  not  always  find  a  sufficient  quantity  of  good 
money  to  pay  their  bills  of  exchange,  and  the  value  of 
those  bills,  in  spite  of  several  regulations  which  were 
made  to  prevent  it,  became  in  a  great  measure  uncertain. 

"  In  order  to  remedy  these  inconveniences,  a  bank 
was  established  in  1609  under  the  guarantee  of  the 
city.  This  bank  received  both  foreign  coin,  and  the 
light  and  worn  coin  of  the  country,  at  its  real  intrinsic 
value  in  the  good  standard  money  of  the  country,  de- 
ducting only  so  much  as  was  necessary  for  defraying 
the  expense  of  coinage,  and  the  other  necessary  ex- 
pense of  management.  For  the  value  which  remained 


146 

after  the  small  deduction  was  made,  it  gave  a  credit  in 
its  books.  This  credit  was  called  bank  money,  which, 
as  it  represented  money  exactly  according  to  the  stand- 
ard of  the  mint,  was  always  of  the  same  real  value,  and 
intrinsically  worth  more  than  current  money.  It  was 
at  the  same  time  enacted  that  all  bills  drawn  upon  or 
negotiated  at  Amsterdam  of  the  value  of  six  hundred 
guilders  and  upward  should  be  paid  in  bank  money, 
which  at  once  took  away  all  uncertainty  in  the  value  of 
those  bills.  Every  merchant,  in  consequence  of  this 
regulation,  was  obliged  to  keep  an  account  with  the 
bank  in  order  to  pay  his  foreign  bills  of  exchange, 
which  necessarily  occasioned  a  certain  demand  for  bank 
money." 

The  agio  or  discount  on  these  moneys  varied  from  9 
per  cent  to  14  per  cent,  and  this,  of  course,  had  to  be 
borne  by  the  people  who  paid  the  coins  to  the-  mer- 
chants. There  is  an  admirable  exposition  or  treatise 
by  Lord  Liverpool,  at  the  close  of  the  last  century,  on 
a  similar  state  of  affairs  in  England.  The  circulating 
silver  coins  were  at  a  discount,  as  against  good  money, 
of  from  9  per  cent  to  38  per  cent.  This  inequality  is 
always  the  bane  of  the  people. 

Prof.  W.  A.  Shaw,  in  his  history  of  currency, 
speaking  of  the  conditions  prevailing  in  the  sixteenth 
and  seventeenth  centuries,  says : 

"There  was  constant  oscillation, — change  of  ratio; 
and  the  least  alteration  of  the  condition  of  one  metal 
made  it  a  lever  for  operations  on  the  other.  These 
operations  were  for  brokerage  commissions  merely. 
They  had  no  relation  to  the  ebb  and  flow  of  commerce 
as  modern  arbitrage  transactions  have.  It  was  a  money 
dealer's  opportunity  of  private  gain,  and  for  private 


gain  the  system  was  worked.  The  ebb  and  flow  of 
European  currencies,  which  the  sixteenth  and  seven- 
teenth centuries  witnessed,  were  as  unnecessary  for  the 
purposes  of  her  commerce  as  they  were  disastrous." 

A  striking  portrayal  of  the  injury  wrought  by  such 
causes  is  also  to  be  found  in  the  fourth  volume  of 
Macaulay's  History  of  England,  chapter  twenty-one. 
He  describes  the  baneful  effect  of  the  employment  of 
clipped  coins,  which  had  become,  in  the  year  1695,  so 
universal  that  he  says  of  it: 

"  It  may  well  be  doubted  whether  all  the  misery  in- 
flicted on  the  English  nation  in  a  quarter  of  a  century 
by  bad  kings,  bad  ministers,  bad  parliaments  and  bad 
judges  was  equal  to  the  misery  caused  by  a  single  year 
of  bad  crowns  and  bad  shillings." 

It  was  found  necessary  to  apply  a  remedy,  and  Soni- 
ers,  Montague,  Locke  and  Newton  were  the  men  who 
devised  measures  for  relief.  The  bad  money  was  melted 
down  and  good  substituted  for  it, — that  which  was  worth 
as  bullion  what  it  purported  to  be  as  coin.  Macaulay 
says  that  "  in  the  midst  of  the  public  disasters  one 
class  prospered  greatly, — the  bankers."  They  were  in 
a  position  to  take  advantage  of  the  opportunities  of 
profit  which  were  presented  to  them.  But,  he  re- 
marks : 

*     *     *     «  The  ]aborer  found  that  tte  bit  Of  metal 

which,  when  he  received  it,  was  called  a  shilling,  would 
hardly,  when  he  wanted  to  purchase  a  loaf  of  bread,  go 
as  far  as  sixpence.  The  ignorant  and  helpless  peasant 
was  cruelly  ground  between  one  class  which  would  give 
money  only  by  tale  and  another  which  would  take  it  only 
by  weight" 


148 

Let  Mr.  Scott  note  the  remark,  "  take  it  only  by 
weight." 

When  Mr.  Scott  asserts  that  gold  monometallism 
(meaning,  I  suppose,  the  gold  standard  of  value,  with 
silver  auxiliary,  as  in  the  United  States  and  France) 
renders  money  scarce,  he  makes  a  statement  that  is  in 
defiance  of  all  the  facts  of  the  case.  There  is  more 
money,  real  and  credit,  per  capita  in  France,  Great 
Britain  and  the  United  States,  and  the  world  also,  than 
ever  before,  and  this,  too,  with  a  refinement,  a  facility 
of  exchange,  never  before  approximated.  The  scarcity 
or  abundance  of  money  is  indicated  by  the  rate  of  in- 
terest. Interest  was  never  so  low  as  at  the  present  time. 
In  California  the  savings  bank  rate  of  interest  earnings 
has  fallen  six-tenths  in  twenty  years,  and  throughout 
the  United  States  33  per  cent  in  the  same  period. 

As  countries  on  a  silver  monometallic  basis  are  cited 
by  the  advocates  of  free  silver  as  more  prosperous  than 
the  United  States,  the  prosperity  surely  cannot  arise 
from  what  Mr.  Scott  calls  "  plenteous  money,"  the  cir- 
culation per  capita  being,  approximately,  as  follows : 

United  States.  .Gold,  silver  and  paper,  active.  $23.60  per  capita. 

Mexico Gold  and  silver 4.95    "       " 

Japan Gold  and  silver 4.00    "       *  * 

India Silver  and  paper 3.33    "       " 

China Silver 2.08    "      " 

Malayan  Straits.Silver 3.26    " 

The  obligations  of  one  country  to  another  are  not  in 
the  main  paid  in  money  but  in  the  exchange  of  pro- 
ductions, and  the  final  settlement  of  balances  only  is 
in  gold  or  silver  as  commodities,  at  their  commercial 
value  per  ounce.  No  money  can  enter  this  commercial 


149 

realm  as  standard  but  true  money,  viz,  that  based  on  in- 
trinsic equivalency.  Only  that  which,  after  melting, 
is  worth  as  bullion  what  its  face  previously  purported, 
is  true  money, — not  any  other;  and  no  legal  enact- 
ment or  kingly  decree  can  alter  this  unwritten  law. 

"  Commerce,  from  the  dawn  of  civilization,  has  been 
the  supreme  arbiter  of  every  system  of  monetary  ex- 
change. That  system  has  either  stood  or  fallen  as  it 
has  conformed  to  or  been  in  violation  of  the  principles 
of  justice  and  equity  which  commerce  has  declared. 
That  declaration  has  been  at  all  times,  without  a  single 
exception,  that  in  every  metallic  money  there  must 
reside  such  intrinsic  and  indisputable  value  as  makes 
the  stamped  coin  of  the  same  value  as  a  commodity  of 
merchandise  as  the  unstamped." 

As  to  the  proportion  of  obligations  to  gold,  49  to  i, 
alleged  by  Mr.  Scott  on  page  564  of  his  May  article, 
say  for  the  United  States,  or  for  the  State  of  California, 
or  the  world, — it  matters  not, — the  conception  of  the 
functions  of  money  therein  indicated  is  worthy  of 
"  Coin's  Financial  School ;"  and,  to  illustrate  the  ab- 
surdity of  it,  I  suggest  to  Mr.  Scott  that  to  gold  he  add 
silver ;  then  the  proportion  of  his  despair  to  hope  will 
be,  not  as  49  to  i,  but  as  49  to  2 ! 

Herodotus  gives  an  account  of  a  Persian  king  who 
treasured  up  his  revenue  in  this  way  :  "  He  melts  the 
gold  and  silver  he  receives,  and  pours  it  into  earthen 
vessels.  When  the  jar  is  full  and  the  metal  cooled,  he 
breaks  the  jar.  From  these  lumps,  when  he  wants 
money,  he  cuts  off  what  he  needs."  But  modern 
finance  is  not  like  that.  Davanzate  thought  the  sum 
of  all  the  gold,  silver  and  copper  in  the  world  equaled 


in  value  all  the  other  wealth  of  the  world.  But  we 
know  better  than  that.  It  is  related  of  the  father  of 
Alexander  Pope,  the  poet,  that  when  he  retired  from 
business  in  London  he  carried  to  a  retreat  in  the  coun- 
try a  chest  containing  some  20,000  pounds  sterling, 
and  took  out  from  time  to  time  what  was  required  for 
household  expenses ;  and  the  historian  records  that  it 
is  highly  probable  that  this  was  by  no  means  a  solitary 
case.  But  times  and  manners  have  changed  since 
then. 

Mr.  Scott  seems  to  be  unconscious  of  the  great 
economic  potentialities  of  the  present  century,  par- 
ticularly those  of  the  present  generation, — the  trans- 
ferability  of  capital,  cash  or  credit,  the  so-called 
international  loan  fund,  constituting  a  mechanism  in 
obedience  to  which  money  moves  freely  wherever  it  is 
in  best  demand, — wherever  it  is  supposed  it  will  earn 
the  most.  As  examples,  Erlandger  &  Co.,  the  Euro- 
pean bankers  of  the  Southern  Confederacy,  averred 
that,  in  response  to  their  advertisement  for  bids  on 
fifteen  millions  Confederate  Government  bonds,  they 
received  bids  for  over  five  hundred  millions.  When 
France  needed  money  to  pay  the  German  indemnity, 
fifty-five  banking  houses  of  Continental  Europe  and 
Great  Britian  promptly  responded  with  over  one  thou- 
sand millions  of  dollars.  And  on  the  sixty-two  million 
bond  loan  of  the  United  States  for  1895  there  were  bids 
in  London  for  over  five  hundred  millions,  and  for  the 
bond  loan  of  1896  there  were  bids  in  New  York  for 
over  five  hundred  millions.  Said  Walter  Bagehot, 
speaking  of  the  French  loan  : 


"  The  magnitude  of  it  as  a  single  transaction  was 
indeed  new,  but  it  is  only  a  magnificent  instance  of 
what  incessantly  happens;  and*  the  commonness  of 
similar  smaller  transactions,  and  the  amount  of  them 
when  added  together,  are  even  more  remarkable,  and 
even  more  important  than  the  size  of  this  one ;  and 
similar  operations  of  the  u  loan  fund "  are  going  on 
constantly,  though  on  a  far  less  scale." 

For  the  Russian  loan  of  five  hundred  millions  of 
dollars  recently  offered  by  the  bankers  of  Paris,  the 
press  dispatches  reported  that  the  bids  submitted  aggre- 
gated five  thousand  millions  of  dollars. 

If,  for  example,  the  United  States — having  prepared 
for  other  forms  of  circulating  notes — were  to  retire 
greenbacks  and  Treasury  demand  notes,  and  thereby 
break  the  endless  chain  of  Government  redemption  of 
greenbacks,  and  save  all  further  need  for  bond  issues, 
and  were  to  ask  bids  for  five  hundred  millions  of  gold 
on  3  per  cent  bonds,  they  would  be  immediately  forth- 
coming. But  if  the  independent,  unlimited  free  coinage 
of  silver  be  achieved  in  this  country,  the  first  effect  of 
that  will  be  widespread  ruin,  because  it  will  occasion 
the  exclusion  from  current  use  of  the  stock  of  gold 
coins  of  the  country,  and  to  replace  these  by  silver 
coins  would  require  thirteen  years  of  the  entire  coinage 
capacity  of  the  United  States  mints, — this,  to  say 
nothing  of  the  results  of  instant  contraction,  conster- 
nation and  disastrous  panic  from  the  sale  of  securities 
that  would  be  occasioned  by  such  a  change.  But  sup- 
pose ultimate  inflation  through  the  medium  of  silver : 
Money,  like  property,  is  parted  with  for  a  consideration. 


No  matter  how  many  more  coins  there  might  be  coming 
from  the  mints  under  free  coinage,  and  going  into 
the  pockets  of  bullion  owners,  there  would  be  no  more 
coins  in  the  pockets  of  the  people  at  large,  unless  they 
had  something  to  exchange  for  them.  Secretary  Gal- 
latin  once  said  : 

"  The  want  of  money  is  the  want  of  exchangeable 
or  valuable  property  or  commodities,  and  the  want  of 
credit.  The  man  who  says  that  he  wants  money  could 
at  all  times  obtain  it  if  he  had  either  credit  or  valuable 
commodities." 

When  a  question  of  equity  is  considered  in  connec- 
tion with  the  stability  of  a  standard,  it  is  averred,  by 
those  who  have  examined  the  subject,  that  the  average 
duration  of  ordinary  debts  is  less  than  a  year,  and  it 
has  been  shown  by  statistical  investigation  that  the 
average  life  of  land  mortgages  of  whatsoever  kind  and 
character  is  less  than  four  years.  As  gold  resumption 
was  legally  declared  twenty-three  years  ago,  fixing  the 
standard  of  our  money,  it  is  perfectly  safe  to  say  that 
the  average  life  of  all  land  mortgages  has  expired  six 
times  over  within  that  period.  Compare  the  value  of 
Western  wheat  lands  and  Southern  cotton  lands  per 
acre  before  the  Civil  War,  and  it  will  be  found  that, 
despite  the  depression  of  the  immediate  present,  the 
lands  are  worth  far  more  than  they  were  then.  Mulhall 
reports  the  value  of  farm  lands  of  the  United  States  as 
follows,  pounds  sterling  figured  at  $5  : 

1860 $  6,910  millions. 

1870 8,430       " 

1880 10,610       " 

1890 12,790       "  (estimated). 


But  to  be  as  exact  as  possible  I  will  take  the  United 
States  Census  returns  as  follows  : 

1850.    .$3,272,000,000,01 $n   14  per  acre. 

1860  .    .    6,645,000,000,  or 16  27 

1870  .    .      Omitted  because  of  depreciated  paper  currency  basis. 

1880  .    .  10,197,000,000,  or $19  02  per  acre. 

1890  .    .  13,279,000,000,  or 21  31 

As  for  corporations,  railway  mortgages  for  example, 
they  are  a  part  and  parcel  of  the  present  civilization  in 
every  country  on  the  face  of  the  globe,  and  as  they 
mature  from  time  to  time  they  are  almost  invariably 
renewed  at  a  lower  rate  of  interest ;  and  so  it  goes  on, 
and  will  go  on  forever,  without  an  appreciable  demand 
being  made  for  cash  payment  or  anything  of  the  kind. 
The  same  principle  applies  to  domestic  enterprises  and 
loans  from  savings  or  commercial  banks.  So  long  as 
the  borrower  has  good  assets  he  does  not  need  to  pay 
more  than  the  interest  maturing,  because  what  the 
banks  seek  are  responsible  customers  who  are  willing 
to  use  the  funds  which  they  manage,  and  by  far 
the  greater  part  of  these  funds  belong  to  the  working 
people. 

As  to  banks  and  their  obligations,  even  if  any  consid- 
erable proportion  of  the  deposits  were  called  for  and 
obtained,  the  people  in  general  would  not  know  what  to 
do  with  the  money  they  had  withdrawn.  This  is  not 
assuming  a  lack  of  intelligence  on  the  part  of  depositors, 
nor  that  they  are  exposed  to  no  hazard,  nor  that  bankers 
can  provide  against  all  contingencies.  Ricardo  remarks, 
what  every  thoughtful  banker  has  observed,  that : 

"  On  extraordinary  occasions  a  general  panic  may 
seize  the  country,  when  every  one  becomes  desirous  of 


possessing  himself  of  the  precious  metals  as  the  most 
convenient  mode  of  realizing  or  concealing  his  prop- 
erty ;  against  such  panic  banks  have  no  security  on  any 
system" 

The  very  reason  for  the  existence  of  deposit  banking 
— essentially  a  development  of  the  present  century — is 
that  the  owners  of  money  find  it  less  risky,  troublesome 
and  expensive  to  place  it  in  a  bank  than  to  keep  it 
themselves.  The  safety  of  deposit  banking  is  confi- 
dence, and  this  is  partly  the  result  of  habit,  and  partly 
of  the  knowledge  that  anything  like  wholesale  and 
simultaneous  withdrawal  is  impossible,  inconceivable; 
and  thus  confidence  is  maintained,  although  the  fact  is 
perfectly  well  understood  that  the  amount  of  money  in 
hand  or  within  reach  is  as  a  rule  small  compared  with 
the  amount  of  deposits,  while  the  aggregate  of  properly 
constituted  banks  is  a  prepared  machine  to  carry  capital 
in  any  direction. 

[from  a  Circular  Issued  by  Secretary  Carlisle.] 

Monetary  Systems  and  Approximate  Stocks  of  Money  in  the 
Aggregate  and  Per  Capita  in  Ten  of  the  Principal  Countries 
of  the  World. 


COUNTRIES. 

Monetary 
system. 

Ratio  be- 
tween gold 
and  silver 
legal-ten- 
der silver. 

Stock  of 
gold. 

Stock  of 
silver. 

Paper 
currency. 

Per  capita  of 
circulation. 

Gold.  Silv'r. 

United  States  (a)  ... 
United  Kingdom... 
Prance 

Gold  and  silver. 
Gold  

i  to  15.98 

$600,  1  00,000 
b  580,000,000 
b  850,000,000 
b  625,000,000 
c    98,200,000 
b  140,000,000 
b  480,000,000 
b  115,000,000 
b  120,000,000 
c    80,000,000 

$625,600,000 
115,000,000 
487,900,000 
215,000,000 
41,400,000 
120,000,000 
48,000,000 
7,000,000 
15,000,000 
84,300,000 

$383,300,000 
c  113,400,000 
c    32,100,000 
c    60,400,000 
c  191,800,000 
c  204,300  ooo 
c  539,000,000 

$841 
14  91 

22    19 
12  21 
3   20 
3   22 
380 

24  47 
17  65 
i  95 

$8  77 
2  06 
12  94 
4  20 

l?6 

38 
i  49 

2  20 
205 

Gold  and  silver. 
Gold 

i  to  is# 

Italy       

Gold  and  silver. 
Gold  
Silver  

i  to  15% 
"i'toisJ*" 

Austria-Hungary  .  .  . 
Russia    

Australia  .     .   . 

Gold  . 

Gold 

Japan  

Gold  and  silver. 

i  to  16.18 

Total  

$3,688,300,000 

$1,759,200,000 

$1,324,300,000 

a  July  i,  1896  ;  all  other  countries,  January  i,  1895.       b  Estimate,  Bureau  of  the  Mint. 
c  Information  furnished  through  United  States  representatives. 


155 

[From  News  Letter,  July  if,  1896.] 

Editor  News  Letter: 

SIR  :  Recurring  to  Mr.  Scott's  articles  on  "  Hard 
Times  "  in  the  February  Overland,  his  astonishing  error 
regarding  the  consumption  of  gold  seemed  difficult  to 
equal,  but  it  is  a  mild  draft  on  human  credulity  in  its 
misleading  effect  compared  with  the  following  in  the 
Overland  for  May.  In  that  issue  he  says  : 

'  To  pay  in  gold  the  interest  for  two  years  on  the 
aggregate  debt  of  this  country  would  require  not  only 
the  world's  entire  output  of  gold  during  the  specified 
time  ($400,000,000),  but  the  world's  present  stock  of 
$4,000,000,000  in  addition." 

Now  $4,400,000,000  is  the  interest  on  $110,000,000,000 
at  4  per  cent.  As  Mr.  Scott  combines  two  years  for  his 
example,  we  must  divide  *  the  amount,  leaving  a  debt  of 
$55,000,000,000,  and  an  annual  interest  account  of 
$2,200,000,000.  If  he  can  demonstrate  that,  for  exam- 
ple, after  a  general  clearance  of  counterbalancing 
obligations,  this  country  owes  $55,000,000,000,  I  will 
not  wonder  at  his  simile  of  wolves ;  assuredly  the 
contemplation  of  such  a  state  of  things  as  he  asserts 
must  have  put  his  mind  into  a  condition  similar  to  that 
of  the  skater  pursued  by  wolves  : 

"Over  his  shoulder,  wild  with  fear, 

One  hasty  glance  he  steals, 
And  all  the  wolves  in  Christendom 
Seem  scampering  at  his  heels." 

Under  like  circumstances  I  should  myself  be  disposed 
to  say  with  the  frontiersman,  uThe  woods  are  full  of 
'em."  But,  before  accepting  as  truth  his  construction, 
I  must  respectfully  ask  a  definite  bill  of  particulars. 
To  whom  and  for  what  do  we  owe  fifty-five  thousand 


millions  of  dollars?  If  the  whole  mass  of  business 
transactions,  including  the  passing  to  and  fro  of  debits 
(which  are  offset  by  credits),  be  Mr.  Scott's  estimate  of 
the  obligations  of  this  country,  I  grant  him  a  monopoly 
of  that  interpretation  of  the  situation.  Every  debtor 
has  a  creditor,  but  the  real  debt  of  a  country  is  the  sum 
remaining  after  its  credits  are  deducted, — the  clearing- 
house balance,  as  it  were,  upon  a  general  adjustment. 
For  a  given  period  the  clearing-house  balances  in  Lon- 
don showed,  of  coin  used,  only  three-fourths  of  one  per 
cent,  and  99  *^  per  cent  carried  in  bills,  cheques  and  notes. 
That  England  has  loaned  us  money  at  lower  rates 
than  other  countries  would  appear  to  be  the  head  and 
front  of  her  offending,  illustrating  the  old  adage :  If 
you  want  to  lose  a  friend,  lend  him  money.  If  we  are 
bankrupt  and  cannot  pay,  we  ought  to  make  an  assign- 
ment for  the  benefit  of  all  our  creditors.  That  is  the 
way  an  honest  man  does  when  he  fails  in  business.  He 
does  not  hide  his  property  and  offer  fifty  cents  on  the 
dollar.  To  use  the  language  of  a  well-known  French 
writer  of  to-day,  M.  Guibert  of  Paris : 

"  We  will  say  nothing  of  the  moral  discredit  which 
would  be  cast  upon  the  United  States  by  the  adoption 
of  a  monetary  system  equivalent  in  respect  of  Europe 
to  a  declaration  of  legal  bankruptcy.  Let  us  look  to 
the  consequences  which  would  infallibly  be  produced  by 
the  accession  to  power  of  the  men  who  recommend  this 
solution, — the  independent,  unlimited  free  coinage  of 
silver.  Financial  disasters  would  follow  close  upon 
evil  economic  measures,  and  general  poverty  would 
appear,  with  the  discontented,  the  intriguing  and  the 
ambitious  in  its  train." 


We  now  come  to  Queen  Elizabeth's  proclamation 
relative  to  base  money,  regarding  which  Mr.  Scott  re- 
marks, "  She  evidently  had  no  reference  to  silver,  which 
was  sound  money,"  etc.  As  to  legal  tender  in  Queen 
Elizabeth's  time,  which,  Mr.  Scott  infers,  it  was  proba- 
bly not  known  then  in  connection  with  gold  and  silver 
as  we  now  understand  it,  Prof.  W.  A.  Shaw  remarks : 

"  From  the  thirteenth  to  the  eighteenth  century  both 
gold  and  silver  were  actually  employed  in  European 
commerce  without  any  idea  either  of  declaring  or  re- 
stricting the  tender." 

If  Mr.  Scott  were  familiar  with  his  subject  he  would 
know  that  the  money  termed  base  was  silver,  but  issued 
at  coinage  value  or  debased  much  beyond  its  com- 
mercial value,  and,  not  being  redeemable  in  good 
money,  was  therefore  base,  just  as  silver  compared  with 
gold  would  be  to-day  under  unlimited  free  coinage  at 
any  ratio  less  than  its  market  value.  Mr.  Scott  doubt- 
less knows  that  a  Mexican  dollar — unlimited  coinage- 
contains  six  grains  more  silver  than  a  United  States 
standard  silver  dollar,  but  is  worth  only  fifty  odd  cents 
in  San  Francisco,  or  any  other  commercial  or  financial 
center  of  a  first-class  power  of  the  Western  world.  If 
he  would  like  to  know  the  monetary  conditions  under 
Henry  VIII.  and  Edward  VI.  (a  period  of  the  most 
flagrant  and  notorious  debasement  of  money  by  kingly 
fiat  in  English  history),  that  caused  Queen  Elizabeth's 
proclamation,  I  can  enlighten  him.  These  potentates 
believed  that  kingly  decree — law,  fiat — could  create 
values.  What  it  did  create  was  indescribable  human 
misery.  /  repeat,  a  coin  is  just  as  bad  when  debased  by 


overvaluation,  if  not  exchangeable  for  better,  as  when 
unduly  alloyed,  clipped  or  sweated. 

Probably  the  gain  of  the  money  metals  by  Spain 
from  America  in  the  sixteenth  and  seventeenth  cen- 
turies was  followed  by  a  rise  of  prices  in  Spain,  the 
modern  exchange  and  credit  system  being  then  un- 
known ;  and  what  the  other  powers  of  Europe,  includ- 
ing England,  lacked  in  solid  quantity  they  sought  to 
make  up  for  in  fictitious  multiplication,  thus  causing  an 
extraordinary  advance  in  prices  by  reason  of  the  con- 
tinual debasement  and  depreciation  of  the  money. 

From  the  time  of  Henry  VIII.,  early  in  the  sixteenth 
century,  until  in  Elizabeth's  reign,  the  debasement  of 
the  coinage  was  peculiarly  deplorable.  Henry  VIII. 
reduced  the  amount  of  silver  in  a  pound  sterling  from 
2,663  grains:  first,  in  1527,  to  2,368  grains;  second, 
I543>  to  2,000  grains;  third,  1545,  to  1,200  grains; 
fourth,  1546,  to  800  grains  ;  and  in  1551,  under  Edward 
VI.,  it  was  only  400  grains,  or,  at  present  mintage 
value  of  silver,  about  $1.08.  Under  the  depreciated 
coinage,  prices  rose  over  400  per  cent,  and  business  was 
active  with  the  tradesmen,  brokers  and  "money  gam- 
blers," but  not  so  with  the  working  people.  The  histo- 
rian Jacob  says : 

"  It  would  naturally  be  imagined,  at  a  time  when 
money  was  almost  exclusively  looked  upon  as  wealth, 
that  an  addition  to  it  (supposed  new  metal  from  Spain's 
stores)  would  have  been  hailed  with  joy ; — that  every 
individual  and  each  community  would  have  been  glad- 
dened at  the  knowledge  that  they  were  becoming  more 
rich  than  they  had  before  considered  themselves. 
The  very  reverse  of  this,  however,  appears  to  have 


been  the  case,  and  complaints  of  distress  were  never  so 
frequent  nor  so  loud  as  at  the  period  we  are  now  re- 
ferring to.  The  rates  of  wages  to  day  laborers  do  not 
seem  to  have  risen  in  the  same  proportion  as  the  neces- 
saries of  life,  and  the  laws  passed  under  Elizabeth  for 
the  relief  of  the  poor  are  sufficient  evidence  of  their 
wretched  condition." 

Of  which  Queen  Elizabeth  later  on  took  further 
notice  by  reforming  the  coinage.  In  the  midst  of  this 
period  Bishop  Latimer  inveighed  bitterly  against  the 
cruel  injustice  wrought  upon  the  laboring  classes,  say- 
ing that: 

"  Poor  men  (which  live  of  their  labor)  cannot,  with 
the  sweat  of  their  face,  have  a  living,  all  kinds  of 
victuals  is  so  deare, —  pigges,  geese,  capons,  chickens, 
egges,  etc.  These  things  with  others  are  so  unreason- 
ably enhansed,  and  I  thinke,  verily,  that  if  it  thus  con- 
tinue we  shall  at  length  be  constrained  to  pay  for  a 
pigge  a  pound." 

And,  as  Latimer  predicted,  it  came  about  that  they 
did  have  to  pay  a  pound  for  a  pig ;  but  as  shown  above 
the  pound  would  be  to-day  only  $1.08. 

In  Thorold  Rogers'  "  Economic  Interpretation  of 
History  "  he  says  : 

1  The  conclusion  which  I  arrived  at  was  that  payments 
were  made  by  weight,  and  not,  as  now,  by  tale ;  that, 
whatever  was  the  weight  of  pieces  issued  by  the  mint, 
a  man  who  covenanted  to  pay  or  receive  a  pound  of 
silver  for  goods,  services  or  dues  received  5,400  grains 
of  silver  up  to  1527,  and  5,760  grains  afterward,  and 
that  this  system  lasted  from  the  earliest  records  down 
to  the  reformation  of  the  currency  under  Elizabeth." 


i6o 

Hence  Macaulay's  reference  to  the  grinding  of  the 
peasant  between  the  upper  and  the  nether  millstones, 
that  is,  the  exacting  by  weight  and  paying  by  tale. 

Mr.  Scott  says : 

(  That,  on  a  gold  basis,  money  in  this  country  is 
scarce  is  evidenced  by  the  fact  that  we  by  necessity 
issue  bonds  to  the  amount  of  hundreds  of  millions  of 
dollars,  obsequiously  paying  the  bond-takers,  mostly 
foreign,  a  large  premium  on  the  gold  received  from 
them/1 

Mr.  Scott  should  know  that  the  demand  for  gold  of 
this  country  within  the  past  four  years,  while  in  part 
caused  by  the  need  of  it  resulting  from  the  general 
breaking  down  of  speculative  inflation  in  Argentina, 
Australia  and  the  United  States,  has  been  largely 
caused  by  the  sale  of  various  forms  of  American  invest- 
ment securities  held  by  foreigners,  because  of  the 
apprehension  that  we  might  try  to  pay  a  dollar  of  obli- 
gation in  fifty  cents  worth  of  silver.  As  to  the 
necessity  for  the  sale  of  bonds  by  this  Government 
recently  to  provide  a  supply  of  gold,  that  was  owing  to 
the  vicious  system  of  note  issues  by  the  Government. 
The  law  of  1878  compels  the  reissue  of  greenbacks,  no 
matter  how  often  redeemed,  and  under  the  workings  of 
that  law,  and  the  incubus  of  silver  certificates  and 
Treasury  demand  notes, — an  addition  of  500  millions 
since  the  gold  reserve  was  fixed  at  100  millions, — our 
Government  must  be  the  purveyor  of  gold  for  all  bond- 
brokers,  a  money  gamblers,"  importing  merchants,  etc. 
The  vice  is  in  the  laws  of  1862  and  1878,  compelling 
the  issue,  redemption  and  reissue,  in  endless  iteration, 


of  legal-tender  paper  money  by  the  Government.  In 
1879,  in  the  Congress  of  the  United  States,  General 
Garfield  said  :  "  I  fear  there  will  never  be  any  permanent 
safety  to  business  so  long  as  there  is  a  greenback 
in  circulation."  I  shall  be  glad  to  furnish  Mr.  Scott  an 
exposition  of  this  subject  if  he  desires  it. 

[From  News  Letter,  July  18,  7896.] 

Editor  News  Letter  : 

SIR:  Digressing  for  a  moment  from  Mr.  Scott's  pre- 
vious articles  to  refer  to  one  in  the  July  Overland:  He 
sets  afloat  again  a  misquotation  from  Aristotle,  which 
appeared  in  Henry  Cernuschi's  u  Nomisma,"  published 
some  sixteen  or  seventeen  years  ago,  and  which  was 
exposed  at  the  time,  particularly  so  by  Louis  A.  Garnett 
of  this  city  in  a  "  Monograph  on  Bimetallism,"  pub- 
lished in  1 88 1.  Mr.  Scott,  in  his  endeavors  to  maintain 
the  fallacy  that  Government  can  create  value,  misquotes 
Aristotle  as  follows  :  "  Money  by  itself  has  value  only 
by  law  and  not  by  nature."  In  support  of  this  view  he 
goes  ori  to  quote  Professor  Andrews  of  Brown  Univer- 
sity, but  Professor  Andrews  has  not  yet  attained  to 
eminence  as  an  economist,  and  his  views  cannot  be 
accepted  as  authority. 

Aristotle,  in  giving  an  account  of  barter  and  the 
origin  of  money  as  a  medium  of  exchange,  etc.  (see  an 
article  on  the  "  Natural  Law  of  Money"  in  the  July 
Overland},  in  speaking  of  the  inconvenience  of  barter 
arising  from  the  incommensurability  of  commodities, 
etc.,  said,  substantially: 

"For  this  reason  men  invented  among  themselves, 
by  way  of  exchange,  something  which  they  should 


162 

mutually  give  and  take,  and  which,  being  really  valu- 
able in  itself,  might  easily  pass  from  hand  to  hand,"  etc. 

Referring  in  his  "  Ethics  "  to  this  idea  of  the  inherent 
value  of  money,  he  adds:  "  But  with  a  view  to  further 
exchange,  if  we  have  no  present  need  of  it,  money  is, 
as  it  were,  our  security,"  etc.,  thus  clearly  recognizing 
the  value — storing  function — of  money  when  based 
upon  inherent  utility,  from  which  exchangeable  value 
arises.  Elsewhere  in  his  "  Politics,"  in  discussing  the 
various  theories  of  money,  he  says  : 

"  Men  sometimes  suppose  wealth  to  consist  in  the 
quantity  of  money  which  any  one  possesses,  as  this  is 
the  medium  with  which  trading  and  trafficking  are  con- 
cerned. Others,  again,  regard  it  as  a  trifle,  as  having 
no  value  by  nature,  but  merely  by  arbitrary  com- 
pact," etc. 

This  is  the  passage  which  was  misquoted  by  Mr. 
Cernuschi,  and  those  who  have  followed  him,  including 
Mr.  Scott,  by  omitting  the  very  important  words, 
"Others,  again,  regard  it"  etc.  By  this  omission  it 
has  been  made  to  appear,  latterly,  as  Aristotle's  own 
theory  of  money,  whereas  he  was  merely  stating  the 
various  theories  of  others  that  were  current  in  his 
days. 

Singularly  enough — in  view  of  the  revival  of  this 
error — I  have  at  hand  a  definition  of  good  money  by 
Mr.  Cernuschi.  He  says  : 

"  The  coins  which,  being  melted  down,  retain  the 
entire  value  for  which  they  were  legal  tender  before 
being  melted  down,  are  good  money;  those  which  do 
not  retain  it  are  not  good  money." 


Mr.  Scott  can  try  this  test  on  Mexican  silver  dollars, 
and,  according  to  the  political  lights  of  last  week's 
National  Convention  at  Chicago,  we  are  to  have  the 
opportunity  of  testing  upon  a  large  scale  the  efficacy  of 
Government  fiat  in  creating  values.  Of  this  delusion 
and  its  causes,  more  in  future  papers. 

Recurring  to  the  "  Hard  Times  "  article  of  Mr.  Scott 
in  the  May  number  of  the  Overland  Monthly,  on  page 
572  he  says : 

'  The  act  of  1873,  limiting  the  legal-tender  function 
of  silver  to  five  dollars,  tended  to  diminish  prices  still 
further,  and  has  proven  a  canker,  growing  continuously 
more  obstinate." 

A  Layman  would  be  glad  to  hear  further  from  Mr. 
Scott  regarding  such  an  act  of  1873,  of  which  he  has 
not  had  prior  knowledge.  The  act  of  1853  limited  the 
tender  of  subsidiary  coin  to  $5,  and  the  act  of  1873 
omitted  the  silver  dollar  from  coinage.  However,  the 
United  States  have,  since  that  date,  acquired  approxi- 
mately 500  millions  of  legal-tender  silver.  And  here  I 
submit  for  Mr.  Scott  an  unanswered  conundrum  by 
Professor  Lexis : 

u  How  has  it  been  possible  that  the  United  States, 
which,  from  1878  to  1893,  issued  more  silver  money  or 
silver-covered  notes  than  all  the  European  States  taken 
together  had  issued  in  a  like  period  previous  to  1893, 
and  more  than  it  would  have  been  called  upon  to  coin 
under  a  system  of  universal  international  bimetallism  ; 
how  has  it  been  possible  that  the  United  States,  which 
produces  annually  $35,000,000  gold,  and  coins  in  cor- 
respondingly large  sums,  and  which,  moreover,  has 
maintained  in  circulation  500  millions  of  paper  cur- 
rency,— and  a  superabundance  of  media  of  exchange, — 


1 64 

has  suffered  from  a  perhaps  still  greater  depression 
than  that  assumed  to  have  been  produced  in  Europe  by 
gold  monometallism,  and  that  the  prices  of  commodities 
of  the  United  States,  notwithstanding  the  Chinese-like 
isolation  of  its  market  by  a  protective  tariff  wall,  have 
shown  the  same  downward  movement  we  find  in 
Europe  ?  Is  it  not  plain  that  the  movement  cf  prices 
which  in  two  regions,  with  the  conditions  of  the  stand- 
ard so  entirely  different,  but  which  manifest  the  same 
effects  and  the  same  course  of  things,  must  have  other 
causes  than  the  demonetization  of  silver,  which  did  not 
really  begin  in  the  United  States  until  the  repeal  of  the 
purchasing  clause  of  the  Sherman  Act  (November, 
1893),  but  which  has  left  500  millions  of  credit  money 
in  circulation  at  its  full  nominal  value  ?  " 

Again,  if  circulating  money  quantities  control  the 
price  of  commodities,  why  have  they  fallen  in  Germany 
after  that  government  received  $1,000,000,000  of  gold 
from  France,  the  greatest  sum  ever  possessed  at  any 
one  period  by  all  the  German  States  combined,  and 
probably  a  greater  sum  than  ever  was  possessed  by  any 
one  government  at  any  one  time  ? 

Again  :  after  the  year  1780  an  enormous  and  long- 
continued  rise  of  prices  presents  itself.  And  when  they 
had  reached  their  highest,  about  the  years  1809-15,  a 
still  more  surprising  fall  of  prices  commences,  reaching 
its  lowest  point  between  1845  an(^  1849.  Between  1809 
and  1849,  prices  fell  in  the  ratio  of  100  to  41.  This  was 
the  period  in  which  the  alleged  great  international  mone- 
tary regulator,  the  so-called  French  Bimetallic  Act  of 
1803,  was  supposed  to  be  at  its  highest  state  of  efficiency. 

In  the  Chicago  Quarterly  Journal  of  Political 
Economy  for  March,  1895,  *s  to  be  found  an  article  on 


;'  Money  and  Prices  "  by  a  gifted  California  woman, 
Miss  Sara  McLean  Hardy,  which  would  be  a  credit  to 
any  of  the  best  economists  of  this  country,  and  it  is 
respectfully  commended  to  Mr.  Scott  with  the  sugges- 
tion that  he  read,  ponder  and  inwardly  digest. 

In  this  connection  the  following  from  Pierre  des 
Essars,  French  economist,  just  published,  is  of  present 
interest : 

'  The  advocates  of  free  coinage  are  wont  to  invoke 
the  theory  of  prices,  and  to  enlarge  upon  a  supposed 
appreciation  of  gold  resulting  from  a  monetary  contrac- 
tion, which  is  not  to  be  discovered  by  any  examination 
of  the  matter  made  in  good  faith. 

'  Those  who  make  the  fall  in  prices  the  basis  of  their 
complaints,  and  attribute  it  to  a  monetary  cause,  must 
accept  the  burden  of  proving  their  case,  for  as  yet  no 
relation  of  cause  and  effect  has  been  established 
between  the  alleged  scarcity  of  gold  and  the  decrease 
in  prices  of  commodities.  What  is  incontestible  is  that 
industrial  nations  have  been,  and  are,  employing  all 
the  resources  of  modern  science  to  reduce  to  the 'mini- 
mum the  cost  of  production,  and,  as  fast  as  an  over- 
supply  has  closed  the  outlet  for  a  constantly  increasing 
capital,  the  money  thus  released  has  sought  employ- 
ment in  new  countries,  which,  in  their  turn,  have 
become  competitors  of  the  old. 

'  The  attempt  to  use  depreciated  currency  as  a  weapon 
with  which  to  oppose  a  fall  in  prices,  acting  like  one  of 
the  forces  of  nature  everywhere  and  upon  all  substances, 
is  simply  an  attempt  to  impede  the  evolution  of  humanity, 
and  to  place  in  jeopardy  the  future  of  civilization" 

As  a  rise  in  prices  is  one  of  the  things  that  the  free 
silver  advocates  are  clamoring  for,  let  us  inquire  into 
that.  As  far  as  business  activity — so-called  prosperity 


i66 

— is  based  on  a  greater  quantity  of  production,  and  that 
of  the  right  article p,  as  far  as  it  is  based  on  the  increased 
rapidity  with  which  commodities  of  every  kind  reach 
those  who  want  them,  its  basis  is  good.  But  in  so  far 
as  that  activity,  or  so-called  prosperity,  is  based  on  a 
general  rise  of  prices,  it  is  imaginary,  it  is  bad.  A 
general  rise  of  prices  is  a  rise  only  in  name.  As  a 
rule,  with  exceptions,  whatever  any  one  gains  on  the 
article  which  he  has  to  sell,  he  loses  on  what  he  has  to 
buy,  and  so  he  is  just  where  he  was.  To  the  country, 
as  a  whole,  a  general  rise  of  prices  in  domestic  com- 
merce is  no  benefit  at  all ;  it  is  simply  a  change  of 
nomenclature  for  an  identical  relative  value  in  the  same 
commodities. 

The  status  of  recent  land  values  in   California  and 
present  depression  offers  a  striking  example  of  this : 


Total 

Total  valuation 

number  of 

of  land,  fences 

Year. 

farms. 

Total  acreage. 

Improved. 

Unimproved. 

and  buildings. 

1850 

872 

3,893,985 

32,454 

3,861,531 

3,874,041 

i860 

18,716 

8,730,034 

2,468,034 

6,262,000 

48,726,804 

1870 

23»724 

11,427,105 

6,218,133 

5,208,972 

141,240,028 

1880 

36,934 

J6,593,742 

10,669,698 

5,924,044 

262,051,282 

1890 

52,894 

21,427,293 

12,222,839 

9,204,454 

697,116,630 

The  rate  per  acre  is  as  follows  :  1850,  $  .99  per  acre ; 
1860,  $5.58  per  acre;  1870,  $12.36  per  acre;  1880, 
$15.79  per  acre;  1890,  $32.62  per  acre,  or  an  increase 
of  106  per  cent  per  acre  between  1880  and  1890  ;  a  total 
increase  in  values  of  $435,000,000,  or  160  per  cent,  an 
inflation  wholly  out  of  proportion  to  any  normal  condi- 
tions or  progress.  Does  Mr.  Scott  wonder  that  there 
should  have  been  a  collapse  in  values  within  the  past 
six  years  ? 


167 

The  above  data  was  received  from  Edwin  F.  Smith, 
Secretary  of  the  State  Board  of  Agriculture  at  Sacra- 
mento, and  Mr.  Smith  remarks : 

"  The  value  of  farming  lands  in  California  at  the 
present  day  has  shrunk  at  least  25  per  cent  from  the 
value  of  1890  for  many  reasons.  The  first  and  most 
prominent  one  is  that  in  1890  the  lands  of  California 
assumed  a  fictitious  value  by  reason  of  the  extension 
of  fruit-growing.  For  a  few  years  prior  to  1890,  the 
prices  received  for  fruit  warranted  an  increased  acreage, 
and,  to  that  end,  the  most  valuable  lands,  namely,  those 
bordering  upon  or  near  our  large  watercourses,  or 
susceptible  to  irrigation,  were  in  demand,  and  values 
increased.  This  fact  enhanced,  to  a  considerable  extent, 
lands  not  susceptible  to  fruit  culture,  but  that  were 
situated  adjacent  to  first-class  fruit-growing  land,  and 
upon  which  cereals  were  cultivated.  Under  this  influ- 
ence these  lands  that  were  quoted  at  from  $25  to  $40 
per  acre  increased  to  $50  and  $75,  not  from  any  cause 
other  than  above  quoted.  It  was  about  at  this  time  that 
farmers  began  to  feel  wealthy,  and  invested  in  outside 
ventures,  borrowing  money  upon  these  inflated  values, 
and  did  not  feel  their  condition  until  the  present  times 
of  depression,  and,  when  called  upon  to  pay  mortgages, 
found  that  transfer  of  loan  was  impossible  by  reason  of 
shrinkage  in  values,  and  were,  consequently,  left  in  a 
deplorable  condition." 

The  facts  and  opinions  furnished  by  Mr.  Smith  are 
commended  to  Mr.  Scott's  careful  consideration,  for  they 
will  explain  one  of  the  chief  causes  of  financial  embar- 
rassment among  the  California  farmers. 

Since  the  so-called  demonetization  of  silver  the  gain 
of  capital  in  the  hands  of  the  people,  as  shown  by 


1 68 

deposits    in   savings    banks   in    this    State,    has   been 
approximately  as  follows : 

1870  about $  36,000,000 

1880 52,000,000 

1890 94,000,000 

1895 125,000,000 

1896 132,000,000 

Any  fair  consideration  of  the  land  values  and  money 
savings  of  this  State  will  show  how  unfounded  is  the 
cry  of  exceptional  depreciation.  There  has  been  depre- 
ciation, but  there  was  first  inflation.  We  are  to-day  the 
richest  community  per  capita  of  any  State  in  the  world 
— about  $2, TOO  per  head. 

Mr.  Scott  says  that  at  the  close  of  the  Civil  War  in 
1865: 

"  Labor  pressed  upon  the  industries  far  in  excess  of 
their  ability  to  meet  immediately  its  requirements.  The 
price  of  labor  largely  governing  the  price  of  various 
commodities  necessarily  fell." 

Now  Mr.  Scott's  general  contention  is  a  fall  of  prices 
because  of  a  lack  of  money  and  lack  of  high  pro- 
tection. 

Within  a  period,  say  from  1866  to  1877  inclusive,  the 
value  of  the  average  product  of  the  precious  metals  in 
this  country  was  unprecedented,  an  average  of  over 
$68,000,000  per  annum,  and  yet  during  that  period  we 
experienced  the  most  extraordinary  commercial  activity, 
and  suffered,  1873-77,  first,  a  financial  panic,  and  sec- 
ond, an  industrial  stagnation,  and  third,  a  general 
depression  of  business  that  has  not  been  exceeded  in 
the  history  of  the  country,  not  even  by  the  present, — - 


169 

this  during  General  Grant's  two  terms  in  office.  Were 
these  phenomena  due  to  lack  of  ample  protection  and 
lack  of  money  ?  Moreover,  the  period  of  falling  prices 
has  been  the  period  of  increasing  wages  up  to  1893. 

As  to  low  prices,  the  history  of  our  trunk-line  rail- 
road rates  furnishes  an  interesting  study.  I  quote  from 
the  Hon.  John  Dalzell,  M.  C.,  of  Pennsylvania: 

u  In  1865  the  Pennsylvania  R.  R.  Co.  and  its  lines 
west  of  Pittsburg;  the  New  York  Central  &  Hudson 
River  R.  R. ;  the  Lake  Shore  &  Michigan  Southern ;  the 
Michigan  Central ;  Boston  &  Albany ;  the  New  York, 
Lake  Erie  &  Western,  carried  11,151,701  tons  of  freight, 
or,  to  express  it  in  another  way,  moved  of  tons,  one 
mile,  1,654,324,000.  And  how  much  did  each  ton  cost 
for  carriage?  It  cost  twenty-nine  mills  per  mile.  In 
1885,  twenty  years  afterward,  the  same  system  of  rail- 
roads moved  of  tons,  at  the  rate  of  one  mile,  11,331,306,- 
ooo,  at  a  cost  of  six  mills  a  mile." 

And  reductions  have  continued  since  that  time  to  the 
present. 

A  statement  in  the  Financial  Chronicle  of  June  6, 
1896,  of  the  business  of  the  Southern  Pacific  Company, 
1872  to  1895  inclusive,  shows  that,  while  the  carriage 
of  all  business  per  ton  per  mile  increased  80  per  cent, 
the  reduction  in  the  receipts  per  ton  per  mile,  from 
1872  to  1895  inclusive,  was  66  per  cent,  and  this  is  not 
far  from  the  rate  of  reduction  general  throughout  the 
country  during  the  same  period.  It  seems  pertinent 
here  to  add  that  the  reports  of  our  Interstate  Commerce 
Commissioners  show  that  railroad  service  in  the  United 
States  costs  the  public  on  an  average  less  than  one-half 
what  it  does  in  Europe.  Does  Mr.  Scott  consider  these 


iyo 

reductions,  which  are  universal,  a  hurt  to  the  people? 
I  believe  that  they  are  blessings,  however  much  tempo- 
rary disturbance  or  discomfort  such  vast  changes  im- 
pose. 

Mr.  Scott  says: 

"  Congress,  in  1873,  largely  deprived  silver  of  its 
monetary  use,  and  in  consequence  its  value  greatly 
depreciated.  Should  Congress  confer  upon  silver  a 
monetary  use,  the  logical  conclusion  is  that  its  value 
would  be  augmented  commensurate  with  such  additional 


use." 


I  will  again  remind  Mr.  Scott  that  coinage  is  not 
demand  in  the  economic  sense  of  consumption,  but  is 
in  fact  storage, — stocking  of  supply;  that  the  money 
metals  only  go  to  the  mints  when  not  wanted  elsewhere. 
And  this  fact  has  two  striking  examples  in  this  genera- 
tion: First,  the  extraordinary  gold  coinage  by  the 
French  Government  in  the  fifties,  which  in  one  year 
coined  more  than  the  whole  world's  production  for  that 
year.  Yet  gold  declined  in  value.  Second,  the  Bland- 
Allison  Act,  in  force  from  1878  to  1890,  authorized  the 
purchase  of  from  twenty-four  to  forty-eight  million  dol- 
lars of  silver.  July  14,  1890,  the  so-called  Sherman  Act, 
authorizing  the  purchase  of  fifty-four  million  ounces  of 
silver  per  annum,  was  passed,  very  greatly  augmenting 
the  acquisition  of  silver.  Yet  from  the  time  the  law  went 
into  effect  until  it  was  repealed — three  years  and  four 
months — the  fall  in  the  average  price  of  silver  was  over 
40  per  cent.  Says  Senator  Sherman,  the  author  of  the 
proviso : 

"  The  act  of  1890  demonstrated  the  inevitable  result 
of  free  coinage  in  our  country.  If  the  purchase  of  54 


million  ounces  of  silver  a  year  did  not  prevent  the 
further  decline  of  that  metal,  what  would  have  been 
the  result  if  we  received  and  coined  all  the  silver  that 
would  be  brought  into  the  United  States  from  any 
region  of  the  world  at  the  fixed  rate  of  $1.29  per  ounce, 
worth  in  the  market  73  cents  an  ounce  ?  This  is  a 
proposition  the  logic  of  which  it  is  impossible  to  avoid." 

There  has  been  an  extraordinary  increase  of  the 
British  gold  product  within  the  past  five  years,  includ- 
ing 1896,  and  it  is  more  plentiful  than  ever  in  the 
English  and  continental  banks;  and  yet,  as  a  matter 
of  fact,  the  coinage,  which  is  free,  has  fallen  off.  Thus 
the  theory  of  the  bimetallist  is  again  put  to  the  test, 
and  shows  that  it  is  unfounded.  In  fact,  as  stated 
hitherto,  coinage  is  not  demand  in  the  economic  sense. 
Moreover,  it  is  the  range  of  prices  and  the  activity  of 
trade  which  determine  the  quantity  of  money  in  circu- 
lation, and  not  the  quantity  of  money  in  circulation 
that  determines  prices. 

As  to  any  possible  benefit  from  the  independent,  un- 
limited free  coinage  of  silver  by  the  United  States,  ,Dr. 
Otto  Ahrendt,  the  eminent  German  bimetallist,  says, 
in  the  North  American  Review  for  June  : 

"  The  United  States  alone  cannot  establish  the 
double  standard  by  adopting  free  coinage ;  they  would 
shift  over  to  the  silver  standard,  and  we  should  vainly 
wait  for  a  stable  ratio  of  values." 

This  is  concurred  in  by  every  international  bimetallist 
of  any  repute  whatsoever;  and,  I  repeat,  a  coin  is  just 
as  bad  when  debased  by  overvaluation,  if  not  exchange- 
able for  better,  as  when  unduly  alloyed,  clipped  or  sweated. 


172 

Political  hysteria  and  popular  frenzy  may  overthrow 
established  institutions,  but  they  cannot  overcome  nat- 
ural law. 

[from  News  Letter,  July  25,  1896.} 

Editor  News  Letter  : 

SIR:  Recurring  to  Mr.  Scott's  article  in  the  Feb- 
ruary number  of  the  Overland,  referring  presumably 
to  the  indebtedness  of  our  people,  Mr.  Scott  likened 
the  condition  of  the  country  to  a  household  at  the 
doors  of  which  there  were  countless  packs  of  ravenous 
wolves,  yet  at  the  conclusion  of  his  May  article  he 
quotes  Edward  Atkinson  to  show  that,  since  1860  say 
to  1894  (chiefly  from  '78  to  '94,  under  the  gold  stand- 
ard), the  condition  of  the  mechanics  of  this  country 
has  been  so  improved  that  there  is  a  net  average  gain 
in  the  lower  cost  of  necessaries  and  the  higher  price  of 
wages  of  $372  per  year,  or  54  per  cent.  This  has 
mainly  resulted  since  1878,  under  resumption  and  gold 
standard;  and  similar  improvement  is  just  as  marked 
in  Europe,  notably  France,  but  particularly  in  Great 
Britain,  a  gold-standard,  free-trade  country.  How  does 
Mr.  Scott  reconcile  these  increased  wage-earnings  with 
that  presumably  famishing  condition  which,  according 
to  his  rhetoric,  has  filled  the  country  with  ravenous 
wolves  ?  Mr.  Scott  says  further : 

"  The  workman's  standard  of  measurement  is  his 
labor.  To  him  the  instrument  of  exchange — silver  or 
gold — between  his  labor  and  requirements  is  insignifi- 
cant. Probably  in  most  cases  his  convenience  would 
prefer  payment  part  in  silver  and  part  in  gold." 


This  latter  is  doubtless  correct  under  the  present 
status,  but  surely  Mr.  Scott  knows  that  under  the  inde- 
pendent, unlimited  free  coinage  of  silver  the  workman 
would  get  no  gold, — silver  only,  and  that  would  be 
worth  no  more  in  its  purchasing  power  than  its  silver 
bullion  value ;  then  it  would  by  no  means  be  an  insig- 
nificant question,  but,  on  the  contrary,  one  of  vital 
importance  to  every  wage-earner  and  savings  bank 
depositor,  and  under  such  a  state  of  affairs  a  simile  of 
wolves  might  become  peculiarly  pertinent.  I  repeat, 
a  coin  is  just  as  bad  when  debased  by  overvaluation,  if 
not  exchangeable  for  better,  as  when  unduly  alloyed, 
clipped  or  sweated.  Prof.  Arthur  T.  Hadley  of  Yale 
College,  in  his  "  Economics,"  points  out  the  evil  effects 
of  such  a  coinage,  and  calls  attention  to  the  fact  that  so 
ancient  an  observer  as  Aristophanes  commented  upon 
the  tendency  of  depreciated  money  to  drive  out  good, 
full-value  money.  I  have  already  called  attention  to 
the  conclusions  of  Oresme,  Copernicus  and  Gresham 
in  the  fourteenth,  fifteenth  and  sixteenth  centuries,  now 
known  as  the  Gresham  Law;  and  Professor  Hadley,  in 
commenting  upon  the  Gresham  Law,  says,  amongst 
other  pertinent  observations : 

"  As  the  amount  of  debased  money  grows  larger,  its 
sphere  of  usefulness  grows  smaller.  Importers  and 
others  engaged  in  foreign  trade  have  to  provide  them- 
selves with  a  certain  amount  of  cash  reserve  which 
derives  its  value  from  something  more  wide-reaching  in 
its  effects  than  a  legal-tender  act.  Far-sighted  capital- 
ists, who  fear  the  future  fiscal  policy  of  the  Govern- 
ment, insert  stipulations  in  their  loans  or  in  their 
leases  requiring  payment  of  dues  in  some  specific 


commodity  rather  than  in  the  general  currency  of  the 
country.  Even  as  a  medium  of  exchange  in  domestic 
transactions,  the  debased  money  may  be  discredited  by 
the  action  of  the  people.  D'Avenal  has  collected  some 
curious  facts  which  show  that  the  arbitrary  changes  in 
coinage  made  by  the  French  crown  were  to  a  large 
extent  rendered  inoperative  in  this  way." 

As  Mr.  Scott  quoted  Edward  Atkinson  I  will  also 
put  Mr.  A.  in  evidence,  as  follows : 

"  The  mass  of  gold  in  existence  has  been  sufficient 
to  enable  Germany  to  adopt  the  gold  standard  of  legal 
tender,  the  United  States  and  Italy  to  resume  specie 
payment  substantially  on  a  gold  standard,  the  Latin 
Union  to  cease  silver  coinage  and  to  maintain  their 
existing  stock  of  legal-tender  silver  at  par  in  gold, 
without  creating  any  apparent  scarcity  of  gold  and 
without  any  special  influence  in  depressing  the  prices 
of  commodities  or  services. 

u  The  reduction  in  the  price  of  commodities  has 
been  no  greater  than  would  be  warranted  by  and  might 
have  been  expected  from  the  improvements  in  the  pro- 
cesses of  production  and  distribution.  This  reduction, 
having  been  accompanied  by  a  general  maintenance  or 
rise  in  the  price  or  rate  of  wages,  has  been  almost 
wholly  beneficial, — temporary  hardship  to  special 
classes  being  admitted. 

"  The  advocates  of  silver  monometallism  disregard 
the  fact  that,  from  the  date  of  the  resumption  of  specie 
payment  on  a  gold  basis,  January  i,  1879,  to  the  date 
of  the  silver  panic  in  1893,  the  fall  in  prices  had  been 
accompanied  by  a  constant  rise  in  wages. 

"  The  demand  for  more  money  in  legal-tender  notes 
or  silver  dollars  is  made  by  persons  who  have  no  con- 
ception of  the  true  conditions  of  trade.  In  their  mis- 
directed efforts  to  provide  by  legislation  for  the  issue  of 


fiat  money,  or  by  free  coinage  of  silver,  they  have 
created  distrust,  and  have  thereby  brought  on  a  panic 
accompanied  by  a  partial  paralysis  of  trade,  thus  reduc- 
ing prices  by  their  effort  to  increase  them. 

"  The  effort  of  the  advocates  of  the  free  coinage  of 
silver,  or  of  the  issue  of  Government  legal-tender  paper 
and  other  devices  for  supplying  money,  may  be  at- 
tributed to  their  ignorance  of  the  function  of  credit 
and  of  the  necessity  for  an  established  unit  of  value. 
Their  efforts  are  usually  accompanied  by  bitter  preju- 
dices against  banks  and  bankers.  The  invariable  result 
of  any  success  on  their  part  is  a  paralysis  of  industry 
by  which  prices  are  forced  below  cost,  and  the  compul- 
sory idleness  of  large  numbers  of  workmen  ensues. 
These  results,  long  before  predicted,  were  fully  realized 
in  the  purely  financial  panic  of  1893,  and  will  be 
brought  about  again  sooner  or  later  unless  the  delusion 
of  *  cheap  money '  is  crushed  out." 

Referring  to  Mr.  Scott's  apprehension  that  the  per- 
petuity of  the  institutions  of  this  country  is  threatened 
by  the  concentration  of  wealth  :  I  would  be  glad  to 
have  him  explain  how  the  unlimited  free  coinage  of 
silver — the  foisting  of  a  cheap,  a  depreciated,  money, 
on  the  people — would  change  a  tendency  to  concentra- 
tion. If  he  can  do  so  he  may  thereby  become  a  public 
benefactor.  A  depreciated  currency  invariably  robs 
wage-earners.  As  pertinent  to  this  I  quote  extracts 
from  the  State  platform  of  the  Socialistic  party  of 
Illinois,  May  3Oth  : 

"  The  economic  evils  from  which  the  people  suffer 
are  not  caused  by  the  gold  standard.  The  free  coinage 
of  silver  at  16  to  i,  or  at  any  other  ratio,  can  in  no 
way  better  their  condition. " 


I76 

And  the  Socialist  Labor  party  of  California  has  de- 
clared, and  declared  wisely,  as  follows : 

"  Resolved,  that  we  disapprove  of  the  free  coinage  of 
silver  at  a  ratio  of  16  to  i,  by  the  United  States,  as 
being  class  legislation  for  the  debtor  class,  detrimental 
to  the  interests  of  the  wage-earners,  tending  to  further 
despoil  the  producers  by  cheapening  their  labor  and 
reducing  their  purchasing  power." 

In  the  July  Overland  Mr.  Scott  says  : 

"  No  inconsiderable  portion  of  our  foreign  commerce, 
amounting  in  1890  to  $1,600,000,000,  is  with  silver- 
standard  countries,  the  Orient  and  Spanish  America. 
This  will  evidently  from  now  on  vastly  increase.  The 
prospects  of  rapid  development  of  the  immeasurable 
resources  of  those  countries  are  bright  with  promise. 
In  effecting  those  developments,  their  demands  upon 
our  markets  for  ships,  railroad  material,  machinery  and 
other  products  will  be  immense.  Our  commerce  with 
Europe,  so  far  as  imports  are  concerned,  will  neces- 
sarily greatly  diminish  as  we  enlarge  and  perfect  our 
manufactures.  Wisdom,  therefore,  dictates  that  we 
cultivate  commercial  relations  more  assiduously  with 
the  silver-money  countries  than  with  the  gold.  Their 
markets  are  ours  by  nature,  and  will  be  so  in  practice 
if  we  are  discreet  and  energetic.  They  are  at  our 
doors,  while  wide  oceans  intervene  between  them  and 
our  competitors.  Our  geographical  position  defies  com- 
petition. Our  monetary  policy,  so  far  as  our  foreign 
commerce  is  concerned,  should  be  shaped  in  accord 
with  these  advantages.  From  a  foreign  commercial 
standpoint  it  would  be  better  for  us  to  adopt  the  silver- 
money  standard  rather  than  the  gold,  but  better  still 
for  us  to  adopt  the  bimetallic  standard." 


177 

What  does  Mr.  Scott  deem  a  bimetallic  standard, 
and  how  would  he  carry  it  into  effective  operation  ? 

In  the  July  Engineering  Journal  Edward  Atkinson 
says  : 

"  We  have  sold  to  the  machine-using,  gold-standard 
nations — Great  Britain  and  her  colonies,  France,  Ger- 
many, Holland  and  Belgium — our  excess  of  food,  fibres 
and  fabrics  to  the  extent  of  83  per  cent  of  all  our  ex- 
ports. The  gold  value  of  our  exports  (mainly  consist- 
ing of  the  products  of  agriculture)  in  the  last  decade, 
in  excess  of  our  imports  from  these  specific  countries, 
has  been,  in  round  figures,  $2,500,000,000.  The  advo- 
cates of  the  free  coinage  of  silver  dollars  of  full  legal 
tender  propose  to  enable  the  bankers  of  Europe  to 
gather  in  the  silver  bullion  of  the  world,  of  which  the 
market  value  is  now  68  cents  per  ounce,  to  send  it  to 
our  mints  to  be  coined  without  charge,  and  then  to  force 
it  upon  our  farmers,  wage-earners  and  other  persons  at 
$1.29  per  ounce,  thus  cheating  them  out  of  about  half 
their  dues  for  the  benefit  of  two  privileged  classes, — 
the  silver  miners  of  the  West  and  the  foreign  bankers 
and  their  agents  of  the  East." 

Will  Mr.  Scott  please  tell  us  what  will  become  of  our 
farmers  if  they  lose  their  customers  in  Great  Britain 
and  Continental  Europe  ? 

On  page  366  of  the  February  Overland  Mr.  Scott 
says  of  A  Layman's  criticisms : 

"  As  to  force  in  disproof  of  the  accuracy  of  any  state- 
ment of  mine,  he  might  as  well  have  offered  a  handful 
of  any  other  figures  indiscriminately  gathered ;  and 
perchance  they  would  have  been  as  creditable  to  him,  as 
appears  by  the  following :  Thus  he  sets  forth  as  a  fact 
that  the  commodity  value  of  the  silver  yield  of  the 


I78 

United  States  in  1895  was  approximately  $36,000,000, 
as  measured  in  gold ;  further,  with  respect  to  the 
world's  output,  he  says  :  '  We  find  reference  to  author- 
ities that  the  production  of  gold  in  1895  was  $200,000,- 
ooo,  and  of  silver  $120,000,000.'  And  so  on  he  regales 
us  with  his  statistics,  as  if  really  authentic.  On  applica- 
tion to  the  mint  of  the  United  States  at  San  Francisco 
for  the  Mint  Director's  Report  of  the  production  of  gold 
and  silver  in  the  United  States  in  1895,  the  statistician 
replied  by  letter :  *  The  Report  is  not  yet  printed, — is 
not  yet  prepared.  When  the  Report  is  at  hand  for  1895 
will  send  it  to  you.'  So  it  would  seem  that  Layman 
must  have  a  statistics  manufactory  whose  products  are 
prophetic  and  not  historic,  as  he  would  have  us  believe." 

I  beg  most  respectfully  to  suggest  to  Mr.  Scott  that 
the  Mint  Bureau  of  the  United  States  is  not  the  only 
repository  of  information,  but  that,  if  he  will  take  the 
Bureau's  figures  for  1895  when  they  do  appear,  he  will 
find  A  Layman  did  not  exaggerate. 

However,  I  further  submit  to  Mr.  Scott  that  my 
information  for  the  United  States  of  America,  the 
Republic  of  Mexico,  and  for  South  Africa,  was  authentic ; 
that  for  Russia  and  some  minor  producing  points  was 
estimated  upon  the  basis  of  previous  production.  If 
Mr.  Scott  is  still  skeptical  upon  the  subject,  he  will 
find,  by  referring  to  the  press  dispatches  of  December 
20, 1895,  a  forecast  with  estimates  from  Director  Preston, 
Washington,  of  the  probable  production ;  and  A  Lay- 
man takes  the  liberty  of  saying  that  his  own  estimates 
were  lower  in  every  case  than  those  of  the  Government 
officials ;  and  he  repeats  that  if  Mr.  Scott  will  examine 
the  1895  Mint  Report,  when  it  is  published  complete, 


i79 

he  will  find  A  Layman's  statements  amply  verified. 
The  French  economist,  Paul  Leroy  Beaulieu,  has  stated 
the  world's  product  of  gold  for  1895  at  $200,000,000; 
the  New  York  Evening  Post  gave  it  as  $199,500,000; 
while  the  Mint  Report  now  ready  for  publication  states 
it  at  $203,000,000;  and  for  1896  the  New  York  Journal 
of  Commerce  stated,  July  9th,  upon  reports  from  the 
Mint  Bureau,  that  the  probable  product  of  the  present 
year  will  be  $220,000,000. 

Again,  on  page  565  of  the  Overland,  Mr.  Scott  quotes 
the  silver  product  of  1889  from  Wells,  Fargo  &  Com- 
pany's statement  on  page  289  of  Mint  Report  for 
calendar  year  1894,  and  remarks: 

"  Nothing  on  the  page  indicates  that  these  amounts 
were  obtained  for  equal  weights  of  the  metal.  No  other 
inference  can  be  drawn  from  the  data  than  that  the 
mint  rate,  $1.2929  per  ounce,  obtains  in  both  cases.  It 
cannot  be  inferred  from  the  data  given  that  the  statis- 
tician meant  otherwise." 

Had  Mr.  Scott  read  the  preceding — opposite — page 
(288)  of  the  same  report  he  would  have  seen  it  distinctly 
stated  that  the  output  of  silver  for  1894  had  been  esti- 
mated at  the  average  commercial  ratio  for  that  year,  or 
63  cents  per  ounce.  And  I  will  add,  further,  that,  had 
Mr.  Scott  desired  official  information  on  this  point,  the 
same  Mint  Report  would  elsewhere  have  enlightened 
him.  On  page  17  a  table  is  given  of  the  "  Product  of 
Gold  and  Silver,  from  Mines  in  the  United  States, 
1873-94,"  compiled  by  the  Mint  Bureau  of  the  Govern- 
ment. Moreover,  the  amount  reported  by  Wells,  Fargo 
&  Co.  in  round  figures,  say  $29,000,000  commercial 


i8o 

value,  is  less  than  that  reported  on  page  17  of  the  Mint 
Report.  Of  Mr.  Scott's  errors,  which  are  the  rule  and 
not  the  exception,  more  anon. 

"  If  a  man  could  but  sharpen  his  wits 

With  the  ease  that  he  sharpens  his  knife, 
He  would  make  some  remarkable  hits, 
Now  and  then,  in  the  course  of  his  life." 

[From  News  Letter,  A  ugust  i,  1896.] 

Editor  News  Letter : 

SIR:  Recurring  to  the  "  Silver  Question"  and  the 
"  Hard  Times  "  articles  by  Mr.  Scott,  we  note,  in  pass- 
ing, his  tribute  to  protection,  on  page  568  of  the  May 
Overland,  and  his  assertion  that 

u  The  record  of  facts  shows  that  in  this  country,  from 
1620  to  the  present  time,  each  and  every  period  of  non- 
protection  of  home  industries  has  been  fraught  with 
adversity,  and  that  each  and  every  period  of  protection 
of  home  industries  has  been  fraught  with  prosperity." 

I  frankly  confess  that  I  do  not  understand  what  rela- 
tion the  status  of  the  American  colonies  from  1620  to 
1776  (over  a  century  and  a  half)  bears  to  the  Repub- 
lican policy  of  high  protection ;  and  it  is  certain  there 
has  been  no  period  of  nonprotection  in  the  last  half 
century.  Moreover,  the  workings  of  the  Walker  tariff, 
from  1846  onward,  were  so  satisfactory  than  ten  years 
later,  in  the  National  contest  of  1856,  there  was  no 
agitation  of  the  subject,  and  practically  there  was  no 
interruption  of  the  status  from  1846  to  1862,  after 
which  the  Morrill  tariff,  confessedly  a  war  measure, 
went  into  effect.  Moreover,  the  financial  crash  of  1873 
and  the  subsequent  industrial  stagnation  and  business 
depression  of  five  years  was  in  the  period  of  an 


extremely  high  tariff.     The  same  applies  to  the  break- 
down in  1882-85. 

Of  all  the  schemes  for  exaction  from  the  people  since 
the  Civil  War  closed,  that  of  extreme  protection  has 
been  the  most  effectively  "  worked  "  up  to  the  present 
time,  and,  combined  with  the  issue  of  legal-tender  paper 
money  by  the  Government,  is  the  legitimate  progenitor 
of  the  silver  craze,  which,  if  carried  to  unlimited  free 
coinage,  will  prove  to  be  the  greatest  calamity  that  has 
ever  befallen  this  country.  That  form  of  State  socialism 
called  protection  has  done  more  to  foster  class  legis- 
lation and  produce  inequality  of  fortune,  to  create  false 
standards  in  the  popular  mind  and  familiarize  it  with 
State  aid  and  guardianship  in  private  affairs,  than  any 
other  single  cause.  And  the  evil  effects  are  to  be  seen 
in  the  socialistic,  not  to  say  communistic,  tendencies 
now  shown  by  political  parties,  —  not  merely  the 
Socialist  and  Populist  parties,  etc.,  but  the  Republican 
and  Democratic  parties.  In  the  press  dispatches  of 
July  4th,  amongst  others  of  like  tenor  concerning  the 
political  situation  and  convention  at  Chicago,  appeared 
from  the  Governor  of  a  State  what  reads  in  part  as 
follows  : 

"  The  East  has,  by  legislation  that  makes  us  pay 
tribute  to  it,  acquired  what  money  there  is  in  the  coun- 
try. We  ask  that  the  tariff  shall  be  framed  with 
reference  to  revenue  for  the  Government  and  not  for 
the  purpose  of  making  us  pay  tribute  to  the  East." 

Says  Henry  George  in  the  dispatches  of  the  8th, 
commenting  on  Governor  Altgeld's  speech  before  the 
Democratic  National  Convention  at  Chicago : 


"  He  spoke  without  evasion  or  equivocation  of  what 
is  the  real  root  of  the  silver  movement  in  the  agricul- 
tural West, — the  desire  to  scale  down  debts, — raising, 
more  clearly  than  any  one  I  have  hitherto  heard,  the 
banner  of  the  '  House  of  Want '  against  that  of  the 
'  House  of  Have.'  " 

Said  Amos  Cummings  of  Altgeld  : 

"  He  commanded  the  closest  attention  and  made  the 
most  logical  and  attractive  speech  yet  heard  in  the 
Convention." 

The  protection  policy  has  been  to  not  make  the  receipt 
of  revenue  the  main  consideration,  but  allow  that  primary 
object  of  fiscal  regulations  to  be  thwarted  by  the  attempt 
not  only  to  protect  but  to  specially  "  promote  "  a  great 
variety  of  particular  interests  at  the  expense  of  revenue, 
and  of  commercial  intercourse  with  other  countries. 
Adam  Smith  contended  that  labor  was  the  one  source  of 
wealth,  and  it  was  by  freedom  of  labor,  by  permitting 
the  worker  to  pursue  his  own  interest  in  his  own  way, 
that  the  public  wealth  would  best  be  promoted ;  that 
any  attempt  to  force  labor  into  artificial  channels,  to 
shape  by  laws  the  course  of  commerce,  to  promote 
special  branches  of  industry  in  particular  countries,  or 
to  fix  the  character  of  the  intercourse  between  one 
country  and  another,  is  not  only  wrong  to  the  worker 
or  the  merchant,  but  actually  hurtful  to  the  wealth  of  a 
State.  He  also  said :  "  There  is  no  art  which  one 
government  sooner  learns  of  another  than  that  of  drain- 
ing money  from  the  pockets  of  the  people."  Or,  as 
Walter  Bagehot  said :  "All  governments  like  to  inter- 
fere ;  it  magnifies  their  importance  to  make  out  that 
they  can  cure  the  evils  of  mankind." 


Of  the  excessive  and  indefensible  purchases  by  Gov- 
ernment of  silver  as  a  sop  to  the  Populists,  I  will  again 
call  in  Republican  testimony,  lest  Mr.  Scott  deem  my 
view  "  a  railing  accusation  void  of  truth."  The  Chicago 
Tribune,  the  leading  Republican  paper  of  Illinois,  said, 
editorially,  May  29th: 

"The  Sherman  proviso  was  a  cowardly  makeshift. 
It  was  worse  than  that  :  it  was  a  shameful  trade.  It 
was  the  costly  price  paid  Teller  and  his  fellow  free 
silverites  to  secure  the  passage  of  the  costly  tariff  bill 
of  1890.  The  Teller  and  Jones  stripe  of  Senators 
refused  to  let  the  McKinley  bill  pass  the  Senate  unless 
the  other  Republican  Senators  would  pass  the  Sherman 
amendment,  which  was  almost  as  bad  as  free  coinage. 
And  it  brought  on  the  country  the  disastrous  panic  of 


This  is  one  example  of  the  workings  of  what  Lay- 
man characterized  as  the  legitimate  result  of  per- 
nicious economic  methods  in  commerce  and  finance, 
namely,  of  the  delusion  that  the  Government  can 
create  value  by  statutory  enactment  and  make  the 
people  rich  by  taxation.  I  repeat,  the  trouble  in  this 
country  is  not  a  lack  of  money,  but,  in  part  at  least,  of 
a  sound  economic  and  financial  policy,  which  has,  since 
the  Civil  War,  been  an  almost  unbroken  record  of 
empiricism,  carried  on  in  wanton  disregard  of  the  best 
established  inductions  of  science. 

As  Mr.  Scott  quotes  Daniel  Webster  in  regard  to 
labor,  I  will  also  put  Mr.  Webster  in  evidence.  Said  he 
in  Congress: 

"How,  sir,  do  shipowners  and  navigators  manage? 
How  is  it  they  are  able  to  meet  and  in  some  measure  to 


1 84 

overcome  universal  competition  ?  Not,  sir,  by  pro- 
tection and  bounties,  but  by  unwearied  exertion,  by 
extreme  economy,  by  unshaken  perseverance,  by  that 
manly  and  resolute  spirit  which  relies  on  itself  to  protect 
itself." 

It  is  an  axiom,  in  trade  that  the  prices  of  exportable 
products  are  fixed  in  the  foreign  market  where  the  sur- 
plus is  sold,  and  in  the  currency  of  that  country  accord- 
ing to  its  nominal  value  there.  The  California  farmer 
(whose  obligations,  mortgages  if  there  be,  are  in  terms 
of  gold)  clamoring  for  free  -silver  and  what  politicians 
call  the  "  Protection  of  American  Industry,"  is  a  politi- 
cal spectacle  for  gods  and  men.  Free  to  vote  as  they 
like,  yet  voting  to  tax  themselves  for  the  benefit  of  a 
protective  tariff,  while  they  sell  their  grosser  products, 
as  to  the  excess  left  after  home  needs  have  been  satis- 
fied, on  the  basis  of  the  price  in  Liverpool, — in  compe- 
tition with  the  world.  Mr.  Elaine  asserted  that  the 
McKinley  bill  did  not  provide  a  market  for  a  bushel  of 
wheat  or  a  barrel  of  pork ! 

It  is  customary  for  silver  advocates  to  dwell,  as  a 
writer  in  the  Overland  for  July  has  done,  upon  Ernest 
Seyd's  prediction  of  impending  hard  times.  Every  period 
of  advance  in  the  present  century — the  most  remarkable 
in  its  world-wide  achievements  in  the  history  of  the 
human  race — has  been  followed  by  a  period  of  depres- 
sion and  temporary  stagnation.  For  example,  the 
activity  from  1819  to  1825— namely, tnat  which  resulted 
from  the  resumption  of  specie  payments  by  Great 
Britain  and  the  United  States — was  succeeded  by  the 
breakdown  of  1826,  in  which  France  also  was  involved. 
Recovering  from  this,  another  onward  movement  was 


made  which  culminated  in  the  crash  of  1837  to 
then  came  six  years  of  great  prosperity,  followed  in 
turn  by  a  break  in  1847-48,  from  which,  however,  all 
quickly  recovered ;  and  another  period  of  marked  pros- 
perity ensued  which  lasted  until  1857,  when  again  a 
crash  took  place,  the  recoil  of  which  was  lost  in  the 
convulsions  of  the  Civil  War.  Another  break  occurred 
in  1864-66;  then,  after  a  period  of  phenomenal  activity 
from  1868  to  1873,  we  suffered  a  collapse  and  extreme 
depression  from  1873  to  1877.  The  renewed  activity, 
1878  to  1882,  met  with  a  reverse  upon  the  death  of 
President  Garfield,  which  continued  some  four  years, 
and,  after  an  extraordinary  revival  of  prosperity  during 
the  eight  years  from  1885  to  1893,  came  the  crash  from 
which  the  country  is  still  suffering. 

As  a  matter  of  fact  there  is  no  logical  connection 
whatever  between  these  periods  of  feverish  activity  and 
subsequent  collapse  and  depression,  and  silver  or  the 
policy  of  protection,  beyond  the  pernicious,  the  noxious, 
effect  of  artificial  stimulus  to  prices, — speculation  and 
industrial  exploitation, — because  such  periods  of  activity 
and  depression  have  manifested  themselves  in  Great 
Britain  as  well  as  France,  and  Great  Britain  and  her 
colonies  have  progressed  as  we  have.  Nor  have  circu- 
lating money  quantities  had  any  appreciable  effect, 
except  as  they  departed  from  the  true  standard  of  value, 
— intrinsic  equivalency, — thereby  making  commodities 
high  in  the  ratio  of  money  depreciated  below  the  true 
standard  of  value,  as  witness  France  during  the  Revolu- 
tion, etc.,  England  during  the  continental  wars,  and  the 
United  States  during  the  Revolution  and  our  Civil  War. 


i86 

Mr.  Gladstone  has  stated  that  the  amount  of  trans- 
mittible  wealth, — that  which  could  be  handed  down  to 
posterity, — produced  during  the  first  eighteen  hundred 
years  of  the  Christian  era,  was  equaled  by  the  produc- 
tion of  the  first  fifty  years  of  this  century,  and  that  an 
equal  amount  was  produced  in  the  twenty  years  from 
1850  to  1870.  What  of  the  period  from  1870  to  1896? 
If  we  take  railroads,  iron  steamships,  electric  power, 
and  improved  manufacturing  plants,  these  last  twenty- 
five  years  have  exceeded  all  the  rest.  Of  the  railroads 
and  iron  steamships  at  present  in  existence,  70  per  cent 
have  been  constructed  since  1870.  It  is  alleged  that 
twenty  years  ago  the  power  of  machinery  in  the  mills 
of  Great  Britain  was  computed  to  be  equal  to  600,000,- 
ooo  men,  or  more  than  all  the  adults,  male  and  female, 
of  mankind.  If  that  was  so  twenty  years  ago,  what  is 
it  now  ?  Last  century  pig  iron  cost  $60  per  ton  ;  now 
it  can  be  produced  for  $6,  and  in  1895  the  State  of 
Tennessee  alone  had  the  furnace  capacity  to  produce 
a  greater  quantity  of  iron  than  the  output  of  the 
entire  United  States  in  1860. 

Output  of  the  United  States,  1885 4,044,000  tons. 

Output  of  the  United  States,  1895 9,446,000     " 

This  one  illustration  on  iron  will  answer  all  Mr,  Scott's 
fallacies  on  page  28  of  the  July  Overland. 

To  expect  relief  from  the  disturbing  influences  of 
such  enormous  increases  in  production  as  these  facts 
betoken,  such  gigantic  changes,  aggravated  in  the 
United  States  by  empirical  and  selfish  legislation  and 
a  mania  for  speculation  (all  the  vast  industrial  expan- 
sion of  twenty  years  past  has  been  accompanied  by 


i87 

unexampled  speculative  inflation,  not  to  say  chicanery 
and  fraud,  that  discounted  the  future  for  at  least  one, 
if  not  two,  decades),  I  say,  to  expect  relief  from  such 
disturbing  influences  by  a  resort  to  cheap  money,  a 
depreciated  standard  of  value, — and  extreme  protection, 
— is  to  trust  to  antique  fallacies  which  are  condemned 
by  history  and  by  the  best  economic  thought  of  the 
world. 

Now,  then,  as  to  Mr.  Scott's  tour  de  force  on  protec- 
tion. He  says : 

(  The  Congressional  Act  of  1894,  throwing  wide  open 
the  gates  to  the  inflow  of  foreign  cheap  labor  products, 
has  operated  to  close  the  doors  of  many  American  man- 
ufactories, turn  vast  numbers  of  American  workmen 
into  the  streets,  reduce  the  price  of  labor  and  American 
products,  and  to  bring  gaunt  hunger  to  many  an  other- 
wise happy  home  of  the  country." 

As  Mr.  Gradgrind  would  say,  "  Let  us  apply  a  few 
hard,  cold  facts  "  to  this  heated  and  groundless  rhetor- 
ical assertion.  The  average  duty  under  the  several 
tariffs  of  the  last  fifty  years  has  been : 

Average  ad  Free 

valorem  rates  of  and 

duty  on  dutiable.  dutiable. 

Walker 1846-62  inclusive 25.53  percent 21.55  percent. 

Morrill 1862-73  inclusive 42.86 

Various 1874-82  inclusive 42.64 

Acts  of  1883. .  .1883-90  inclusive 44-72 

McKinley 1891-94  inclusive 48.66 


Wilson,  10  months  1895 41-75 


.37-29 
•26.33 
.29.84 
.22.31 
,20.23 


The  Wilson  tariff,  a'n  aggregate  reduction  on  free 
and  dutiable  goods  of  only  10  per  cent  below  the 
McKinley  tariff,  and  on  dutiable  alone  only  i  per  cent 
lower  than  the  average  of  Republican  tariffs  for  the 


i88 

twenty  years  from  1862  to  1882,  is  what  Mr.  Scott  calls 
;i  throwing  wide  open  the  gates  to  the  inflow  of  foreign 
cheap  labor  products."  Under  the  McKinley  tariff 
the  following  shows  the  workings  for  first  two  years, 
comparatively : 

Dutiable  goods,  1891 . .  .$466,455,173 

"  •    1892...  355>526,74i 

)  Decrease  in  imports  of  dutiable  goods 

$110,928,432  j       during  second  year. 

Free  goods 1891  . .  .$388,064,404 

'"         "     1892...  458,074,604 

)  Increase  in  imports  of  free  goods 

$  70,010,200  j       during  second  year. 

Duty  collected  1892  as  against  1891  decreased  $42,- 
761,431. 

The  manufactured  exports  in  no  year  under  the 
McKinley  tariff  quite  touched  $184,000,000.  In  the 
first  year  of  the  Wilson  tariff's  full  operation  they 
exceeded  $200,000,000,  and  they  promise  in  1896  to 
amount  to  $215,000,000.  The  official  figures  show  that 
while,  for  the  eight  months  ending  February,  1895,  the 
percentage  of  exports  of  manufactured  articles  to  the 
whole  of  our  exports  was  21.26  per  cent,  for  the  eight 
months  ending  with  February  last,  with  a  general 
increase  of  exports,  it  rose  to  24.41  per  cent. 

Tariff  for  other  than  revenue  is  a  form  of  class 
socialism,  and  inequitable ;  but  even  a  McKinley  tariff, 
which  is  a  calculable  evil,  is  tolerable  compared  with 
the  independent,  unlimited  free  coinage  of  silver  by  the 
United  States,  which  would  be  an  incalculable  one.  I 
repeat,  a  coin  is  just  as  bad  when  debased  by  over- 
valuation^ if  not  exchangeable  for  better,  as  when  unduly 
alloyed,  clipped  or  sweated. 


i89 

In  Mr.  Scott's  article  in  the  July  Overland  he  shows 
a  decided  advance  in  zeal,  having  progressed  from 
what  he  termed  in  previous  papers  reprehensible  legis- 
lation to  what  he  now  calls  "  the  crime  against  silver," 
and  remarks  that  "  bimetallism,  long  tested,  proved 
highly  efficient  in  performing  all  the  duties  required 
of  money,  and  therefore  may  safely  be  re-established, 
and  so  ought  to  be."  A  definition  of  what  Mr.  Scott 
deems  bimetallism  now  will  be  in  order,  and  also  as  to 
how  he  would  establish  it.  I  have  hitherto  quoted  the 
declaration  for  gold  by  the  Republicans  at  St.  Louis. 
The  Democrats  at  Chicago,  in  their  National  Conven- 
tion, cut  the  Gordian  knot  by  declaring  for  the  inde- 
pendent, unlimited  free  coinage  of  silver  by  the  United 
States  of  America  at  a  ratio  of  16  to  i.  If  Mr.  Scott 
is  at  all  familiar  with  the  natural  laws  of  money,  he 
knows  that  this  means  silver  monometallism  for  the 
United  States  of  America.  Prof.  Francis  A.  Walker, 
as  reported  in  the  press  dispatches  of  the  i3th  inst,  in 
a  speech  at  a  meeting  of  the  British  Bimetallic  Society 
in  London,  said : 

u  It  is  deeply  to  be  regretted  that  millions  of  our 
best  citizens,  as  represented  at  the  Chicago  Convention 
last  week,  declared  for  the  free  coinage  of  silver  at  the 
ratio  of  16  to  i  without  waiting  for  the  action  of  other 
countries.  This  was  done  passionately,  but  the  effect 
will  be  to  maintain  the  gold  standard  unimpaired." 

The  Populist  Convention  at  St.  Louis,  as  reported  in 
the  Bulletin  of  the  24th  inst.,  declares  as  follows  : 

"  We  demand  a  national  currency  safe  and  sound, 
issued  by  the  general  Government  only,  a  full  legal 


190 

tender  for  all  debts,  private  and  public,  and  without  the 
use  of  banking  corporations,  a  just,  equitable  and 
efficient  means  of  distribution  direct  to  the  people  and 
through  the  lawful  disbursements  of  the  Government." 

Thus  it  appears  that  in  this  campaign  the  Repub- 
licans are  for  gold ;  the  Democrats  are  for  silver ;  the 
Populists  are  for  anything.  What  is  Mr.  Scott  for  ? 
What  camp  is  he  in, — Republican  or  Democratic  ? 

[From  News  Letter,  A  ugust  8,  1896.] 

Editor  News  Letter : 

SIR  :  I  referred  in  my  paper  of  July  7th  (your  issue 
of  nth)  to  the  following  remarks  of  Mr.  Scott  on  page 
566  of  the  Overland  Monthly  for  May  : 

"  That^  on  a  gold  basis,  money  in  this  country  is 
scarce,  is  evidenced  by  the  fact  that  we,  by  necessity, 
issue  bonds  to  the  amount  of  hundreds  of  millions  of 
dollars,  obsequiously  paying  the  bond-takers — mostly 
foreign — a  large  premium  on  the  gold  received  from 
them." 

In  addition  to  the  reference  therein,  I  shall  oppose  to 
Mr.  Scott's  erroneous  dictum  the  views  of  a  Republican 
in  good  standing,  Hon.  Thomas  B.  Reed,  who,  in  a 
speech  at  Alfred,  Maine,  July  28th,  said : 

"  What  we  want  is  not  more  money,  but  more  capital. 
Money  always  comes  with  capital.  We  have  money 
now,  more  than  we  can  use,  lying  idle.  We  have  just 
exported  a  lot  of  it.  Money  is  the  transferer  of  capital, 
as  a  hay  rake  with  horse  attached  is  a  transferer  of  hay. 
More  such  hay  rakes  will  never  make  more  hay,  but 
more  hay  will  require  more  such  hay  rakes  and  is  sure 
to  get  them. 


"  If  I  sell  my  house  in  Portland,  or  mortgage  it  for 
$5,000  and  send  the  result  to  a  Washington  State  coal 
mine,  and  it  is  spent  and  comes  back  to  the  Casco  Bank, 
mY  $5)000  worth  of  capital  is  in  Washington  just  the 
same.  What  this  whole  country  needs  is  capital  from 
abroad^  from  the  whole  world.  I  expect  some  of  you 
will  be  surprised  and  ask  whether  the  world  of  the 
United  States  is  not  immense  and  sufficient,  Immense, 
yes ;  sufficient,  no." 

For  the  purpose  of  external  or  foreign  trade,  a  debase- 
ment of  currency  is  utterly  fatuous  and  pernicious. 
The  coins  are  estimated  at  their  contents  of  pure  metal, 
and  the  international  exchange  is  so  rated.  The  conse- 
quence is  an  apparent  rise  of  foreign  prices  proportioned 
to  the  extent  of  the  debasement.  This  at  once  unsettles 
internal  or  home  trade  prices,  and  they  rise  to  the  same 
level,  but  with  such  inequality  of  motion  as  may  hap- 
pen to  follow  from  friction,  local  ignorance,  want  of 
communication,  or  from  the  intricacies  of  trade.  The 
inequality  of  coin-exchange  rates  which  results  from 
this  is  the  broker's  opportunity, — margins  large  enough 
to  cover  all  commissions  and  risks ;  and  swiftly  and 
inevitably  the  good  species,  or  any,  bad  or  good,  upon 
which  a  differential  profit  can  be  made,  disappears  from 
circulation.  The  consequence  is  that  the  rising  prices 
which  instituted  the  process  are  no  longer  accompanied 
by  an  expanding  or  increasing  volume  of  currency,  but, 
on  the  contrary,  by  a  decrease  in  the  total  of  acceptable 
or  efficient  currency. 

In  Great  Britain,  whose  monetary  system  is  on  a 
scientific  basis,  and  the  integrity  of  whose  obligations 


192 

is  undoubted,  Government  revenues  for  the  past  year 
exceeded  requirements  some  forty  odd  millions  of  dol- 
lars. The  trade  depression  and  business  stagnation  is 
passing  away,  as  the  following  information  will  indi- 
cate. The  London  Standard,  July  14,  1896,  says, 
relative  to  bankruptcies  : 

1  The  thirteenth  annual  report  by  the  Board  of 
Trade  on  the  bankruptcies  which  occurred  during  the 
past  year  has  been  presented  to  Parliament.  In  an 
introductory  report,  Sir  Courtenay  Boyle,  after  com- 
paring the  returns  for  the  past  five  years,  says  :  '  On 
the  whole  it  appears  to  be  the  fact  that  the  annual 
amount  of  trading  insolvency,  so  far  at  least  as  private 
traders  and  partnerships  are  concerned,  is  steadily 
diminishing,  and  that  it  has  during  the  last  few  years 
attained  a  considerably  lower  level  than  at  any  time 
during  the  present  generation.  This  is  a  fact  which 
should  not  be  lost  sight  of  in  any  review  of  the  position 
of  English  commerce.  It  would  be  a  mistake  to  treat 
this  fact  as  bearing  conclusively  upon  the  question  of 
the  prosperity  of  trade,  but  it  appears  to  indicate 
clearly  that,  so  far  as  the  system  of  credit  is  concerned, 
trade  rests  on  a  sound  foundation.'  " 

If  there  were  no  agitation  for  fiat  money,  if  there 
were  no  question  of  the  entire  integrity  of  our  financial 
purposes  as  a  people,  no  question  as  to  the  soundness 
of  our  monetary  status,  normal  conditions  of  industry 
and  trade  would  be  restored  within  twelve  months. 

I  repeat,  that  a  coin  is  just  as  bad  when  debased  by 
overvaluation,  if  not  exchangeable  for  better,  as  when 
unduly  alloyed,  clipped  or  sweated.  What  we  need  is  a 
reformed,  not  a  debased,  currency. 


193 

[From  News  Letter,  August  75,  1896.] 

Editor  News  Letter  : 

SIR  :  In  my  paper  of  a  fortnight  ago  reference  was 
made  to  the  vast  industrial  expansion  of  the  past 
twenty-five  years,  and  its  incalculable  disturbing  in- 
fluences by  reason  of  its  being  accompanied  by  the 
pernicious  growth  of  artificial  trade  stimuli,  reckless 
legislation,  and  a  mania  for  hazardous  exploitation  to 
an  extent  exceeding  even  its  own  magnificent  propor- 
tions. It  is  impossible  to  exaggerate  the  baneful  effects 
of  the  speculative  craze,  yet  when  the  evil  days  have 
come  the  remedy  clamored  for  is  cheap  money,  which  is 
but  adding  insult  to  injury  inflicted  upon  a  deluded 
people. 

It  may  be  of  interest  to  recall  past  experiences 
similar  in  origin,  but  of  less  magnitude,  because  the 
prodigious  industrial  development  of  the  present  was 
then  undreamed  of. 

Lord  Macaulay  says : 

"  In  the  earlier  part  of  the  reign  of  William  the 
Third,  all  the  greatest  writers  on  currency  were  of 
opinion  that  a  very  considerable  mass  of  gold  and 
silver  was  hidden  in  secret  drawers  and  behind  wain- 
scots. 

"  The  natural  effect  of  this  state  of  things  was  that 
a  crowd  of  projectors,  ingenious  and  absurd,  visionary 
and  knavish,  employed  themselves  in  devising  new 
schemes  for  the  employment  of  redundant  capital.  It 
was  about  the  year  1688  that  the  word  stockjobber 
was  first  heard  in  London.  In  the  short  space  of  four 
years  a  crowd  of  companies,  every  one  of  which  con- 
fidently held  out  to  subscribers  the  hope  of  immense 


194 

gains,  sprang  into  existence, — the  insurance  company, 
the  paper  company,  the  lute  string  company,  the  pearl 
fishery  company,  the  glass  bottle  company,  the  alum 
company,  the  Blythe  coal  company,  the  swordblade 
company.  There  was  a  tapestry  company,  which 
would  soon  furnish  pretty  hangings  for  all  the  parlors 
of  the  middle  class,  and  for  all  the  bedchambers  of 
the  higher.  There  was  a  copper  company,  which  pro- 
posed to  explore  the  mines  of  England,  and  held  out 
a  hope  that  they  would  prove  not  less  valuable  than 
those  of  Potosi.  A  company  to  recover  the  treasure 
engulfed  with  Pharaoh's  hosts.  There  was  a  diving 
company,  which  undertook  to  bring  up  precious  effects 
from  shipwrecked  vessels,  and  which  announced  that 
it  had  laid  in  a  stock  of  wonderful  machines  resembling 
complete  suits  of  armor.  In  front  of  the  helmet  was 
a  huge  glass  eye  like  that  of  a  cyclops,  and  out  of 
the  crest  went  a  pipe  through  which  the  air  was  to  be 
admitted.  The  whole  process  was  exhibited  on  the 
Thames.  Fine  gentlemen  and  fine  ladies  were  invited 
to  the  show,  were  hospitably  regaled,  and  were  de- 
lighted by  seeing  the  divers  in  their  panoply  descend 
into  the  river  and  return  laden  with  old  iron  and 
ship's  tackle.  There  was  a  Greenland  fishing  com- 
pany, which  could  not  fail  to  drive  the  Dutch  whalers 
and  herring  busses  out  of  the  Northern  Ocean.  There 
was  a  tanning  company,  which  promised  to  furnish 
leather  superior  to  the  best  that  was  brought  from 
Turkey  or  Russia.  There  was  a  society  which  under- 
took the  office  of  giving  gentlemen  liberal  education 
on  low  terms,  and  which  assumed  the  sounding  name 
of  Royal  Academies  Company.  In  a  pompous  ad- 
vertisement it  was  announced  that  the  directors  of  the 
Royal  Academies  Company  had  engaged  the  best 
masters  in  every  branch  of  knowledge,  and  were  about 


to  issue  twenty  thousand  tickets  at  twenty  shillings 
each.  There  was  to  be  a  lottery  :  two  thousand  prizes 
were  to  be  drawn,  and  the  fortunate  holders  of  the 
prizes  were  to  be  taught,  at  the  charge  of  the  com- 
pany, Latin,  Greek,  Hebrew,  French,  Spanish,  conic 
sections,  trigonometry,  heraldry,  japanning,  fortifica- 
tions, bookkeeping,  and  the  art  of  playing  the  oboe." 

All  this  ended,  of  course,  in  a  colossal  collapse,  finan- 
cial ruin  and  general  misery.     Walter  Bagehot  says: 

"  The  panic  was  forgotten  till  Lord  Macaulay  revived 
the  memory  of  it.  But,  in  fact,  in  the  South  Sea 
bubble,  which  has  always  been  remembered,  the  form 
was  the  same,  only  more  extravagant  still.  The  com- 
panies in  that  mania  were  for  objects  such  as  these  : 
*  Wrecks  to  be  fished  for  on  the  Irish  coast ;  insurance 
of  horses  and  other  cattle  (two  millions)  ;  insurance  of 
losses  by  servants  ;  to  make  salt  water  fresh ;  for 
building  of  hospitals  for  bastard  children  ;  for  building 
of  ships  against  pirates  ;  for  making  of  oil  from 
sunflower  seeds  ;  for  improving  of  malt  liquors  ;  for 
recovery  of  seamen's  wages  ;  for  extracting  of  silver 
from  lead  ;  for  the  transmuting  of  quicksilver  into  a 
malleable  and  fine  metal  ;  for  making  of  iron  with  pit 
coal ;  for  trading  in  human  hair  ;  for  fatting  of  hogs  ; 
for  a  wheel  of  perpetual  motion  ;  for  importing  a 
number  of  large  jackasses  from  Spain.'  But  the  most 
strange  of  all,  perhaps,  was  '  For  an  undertaking  which 
shall  in  due  time  be  revealed.'  Each  subscriber  was  to 
pay  down  two  guineas  and  thereafter  receive  a  share  of 
one  hundred,  with  a  disclosure  of  the  unrevealed  under- 
taking; and,  so  tempting  was  the  offer,  that  one 
thousand  of  these  subscriptions  were  paid  for  the  same 
morning,  with  the  proceeds  of  which  the  projector 
decamped  the  following  afternoon." 


In  1825  there  were  speculations  in  companies  nearly 
as  wild,  and  just  before  1866  there  were  some  of  a  like 
nature,  though  not  quite  so  extravagant.  The  fact  is 
that  the  owners  of  savings, — or  those  who  supposed 
themselves  so, — not  finding  their  usual  kinds  of  invest- 
ment in  adequate  quantities,  rush  into  anything  that 
holds  out  specious  promises;  and,  when  they  find  or 
believe  that  these  tempting  investments  can  be  disposed 
of  at  a  high  profit,  they  rush  into  them  more  and  more. 
The  first  desire  is  for  high  interest,  but  that  soon 
becomes  secondary.  It  is  superseded  by  an  appetite  for 
large  gains,  to  be  made  by  selling  the  principal  on 
which  the  yield  of  interest  is  expected.  So  long  as 
sales  can  be  effected  the  mania  continues ;  when  they 
cease  to  be  possible  ruin  begins. 

Ruin  has  always  been  the  result  of  such  folly,  and 
always  will  be  while  time  lasts;  and  sadly  enough  its 
evil  effects  fall,  not  alone  on  the  unjust  and  foolish,  but 
on  the  just  and  prudent.  The  list  of  harebrained, 
swindling  schemes  put  forth  in  connection  with  the 
South  Sea  bubble  should  have  made  it  apparent  to  the 
sturdy  Britons  that  there  was  no  need  for  the  importa- 
tion of  large  jackasses  from  Spain  or  anywhere  else. 
Yet,  wild  and  foolish  as  the  English  people  were  in 
that  and  the  other  instances  named,  they  have  been 
excelled  in  folly  by  those  of  the  United  States  within 
the  past  twenty  years.  And  when  the  chickens  come 
home  to  roost  they  are,  according  to  Mr.  Scott's  logic, 
to  be  dispersed  by  cheap  money  and  more  protection. 
"  Angels  and  ministers  of  grace  defend  us  !" 


Referring  to  Mr.  Bagehot's  specification  of  "an  under- 
taking which  shall  in  due  time  be  revealed,"  which  had 
for  its  outcome  that  the  projector  went  off  in  the  after- 
noon with  the  moneys  he  had  collected  in  the  forenoon, 
it  seems  very  remarkable,  and  yet  is  trivial  compared 
to  similar  schemes  that  were  foisted  upon  the  people  of 
this  country, — for  example,  what  was  known  as  the 
Blind  Pool,  of  some  twelve  or  fourteen  years  ago,  to 
which  millions  of  dollars  were  contributed,  the  dis- 
position of  which  was  left  to  the  caprice  of  an  audacious 
operator,  who  invested  them  in  various  transportation 
stocks  in  order  to  pool  and  bull  the  prices  of  them.  It 
is  a  sufficient  showing  of  the  madness  and  iniquity  of 
this  and  similar  deceptions  of  the  times  to  say  that 
to-day  the  stocks  of  this  same  Blind  Pool  are  not  worth 
fifteen  cents  on  the  dollar,  and  the  inflation  that  was 
then  accomplished  had  no  visible  basis  except  the 
cupidity  and  gullibility  of  the  people.  The  transporta- 
tion lines  are  all  in  the  hands  of  receivers,  and  the 
decrease  in  share  values  of  the  companies  concerned 
has  been  over  85  per  cent.  And  yet  the  remedy  for  all 
the  losses,  privations  and  misery  resulting  from  the 
egregious  folly  of  furthering  such  schemes  is  cheap 
money,  itself  the  most  potent  of  all  agencies  for  the 
purposes  of  the  gambler  and  swindler.  /  repeat,  a  coin 
is  just  as  bad  when  debased  by  overvaluation,  if  not 
exchangeable  for  better,  as  when  unduly  alloyed,  clipped 
or  sweated. 

Speculation  run  riot  through  the  land, — particularly 
in  building  railroads  (and  even  towns)  that  were  not 
needed,— and  what  took  place  at  Vancouver,  Seattle, 


198 

Tacoma,  Winnipeg,  Sioux  City,  Omaha,  Kansas  City, 
Denver,  Wichita,  Los  Angeles,  San  Diego,  and  scores  of 
other  places,  is  illustrated  by  the  fate  of  a  sister  city. 
The  loot  of  a  Northwestern  city,  as  told  in  a  San  Fran- 
cisco daily  of  December  16,  1895,  *s  another  and  a  yet 
more  startling  revelation  of  such  folly,  and  its  entail  of 
crime  and  financial  ruin.  A  public  debt  of  $5,000,000 
now  hangs  over  that  city  of  only  25,000  people,  with 
interest  on  the  debt  at  $1,000  a  day,  and  an  assessed 
property  valuation  of  only  $26,000,000.  For  the 
$5,000,000  of  city  obligations,  it  has  probably  not  to 
exceed  $1,000,000  of  property  and  $4,000,000  of  debt, 
with  nothing  to  show  for  the  latter,  and  all  this  out 
of  a  vain  and  knavish  endeavor  to  evolve  something 
out  of  nothing,  for  which  the  panacea  now  is, — cheap 
money. 

Our  financial  and  industrial  crises  have,  as  hitherto 
shown,  usually  followed  periods  of  marked  activity,  but 
have  been  owing  to  or  influenced  by  various  causes, — 
vicious  financial  legislation ;  extreme  protection,  so 
called;  wastefulness,  governmental,  corporative  and 
personal;  undue  expansion  of  credit;  wildcat  schemes 
of  speculation  ;  corporate  ventures  capitalized  into  stock 
shares  beyond  all  reason,  beyond  any  just  proportion 
to  the  money  actually  invested;  mushroom  towns  with 
plush  hotels  and  nickel-plated  paraphernalia  generally, 
etc.,  all  accompanied  by  endless  assertion  of  self-suffi- 
ciency. And  now  the  last  and  biggest  bubble  of  all  is 
"  free  silver,"  the  inevitable  effect  of  which  would  be  to 
rob  all  wage-earners.  The  reformation  of  all  these 
evils  requires  more  virtue  than  ever  was  or  ever  can  be 


found  in  money,  fiat  or  otherwise.  If  the  gentlemen 
who  are  advocating  silver  in  the  magazines  of  California 
would  consider  the  speculation  that  the  American  public 
has  indulged  in  for  thirty  years  in  swindling  projects 
of  every  name  and  nature,  and  stock  shares  endlessly 
inflated,  it  seems  to  me  that  they  would  doubt  the  power 
of  Government  to  obviate  the  evil  consequences  of  such 
enormous  waste,  moral  as  well  as  material,  by  more 
"  protection "  and  the  issue  of  fiat  money,  whether 
metal  or  paper. 

"  Transgression  brings  retributive  stings 
To  candle-makers  as  well  as  kings." 

There  is  no  real  capital  except  what  comes  from 
previous  labor  performed ;  and  a  government  is  as 
powerless  to  bring  wealth  into  existence  out  of  nothing 
by  fiat  as  an  individual.  If  it  be  ascertained  that  such 
a  device  is  practical,  it  is  in  truth  the  discovery  of  the 
philosopher's  stone,  and  more's  the  pity  it  was  not  dis- 
covered sooner. 

John  Law  conceived  the  idea  of  making  all  the  prop- 
erty of  France  security  for  the  money  that  country 
issued.  As  the  historian  Blanqui  ironically  remarks, 
"  What  could  be  a  finer  mortgage  than  France."  Yet, 
says  Blanqui,  when  the  financial  debauch  was  over: 
"  Of  all  the  industrial  values  produced  under  the  hot 
atmosphere  of  Law's  system,  nothing  remained  but 
bankruptcy,  ruin  and  desolation.  Landed  property 
alone  had  not  perished  in  the  tempest."  One  of  its 
lessons  is  that  neither  real  estate  nor  anything  else 
not  immediately  convertible  into  real  money,  money  of 
intrinsic  equivalency,  can  support  a  circulating  cur- 
rency. Yet  the  lesson  was  unheeded  even  by  France, 


2OO 

and  during  the  Revolution  alleged  statesmen  came 
forward  in  overwhelming  numbers  to  insist  that  John 
Law's  money  had  at  first  restored  prosperity,  that  the 
immeasurable  wretchedness  and  wrong  it  finally  caused 
had  resulted  from  overissue,  and  that  such  an  over- 
issue was  possible  only  under  a  despotism.  The  col- 
lossal  ruin  that  was  wrought  by  the  issue  of  assignats 
is  a  matter  of  word- wide  notoriety. 

Professor  Perry,  in  his  "  Elements  of  Political 
Economy,"  says  of  the  crazy  monetary  schemes  of 
the  French  Revolution : 

'  The  distress  and  consternation  into  which  a  coun- 
try falls  when  its  current  measure  of  services  is  dis- 
turbed and  destroyed  is  past  all  powers  of  description. 
The  prisons  and  the  guillotine  did  not  compare  with 
the  assignats  in  causing  suffering  during  those  six 
years.  This  example  is  significant  because  it  shows 
the  powerlessness  of  even  the  strongest  and  most 
unscrupulous  government  to  regulate  the  value  of 
anything.  The  assignats  were  depreciating  during 
the  very  months  in  which  Robespierre  and  the  Com- 
mittee of  Public  Safety  were  wielding  the  power  of  life 
and  death  in  France  with  terrific  energy.  They  did 
their  utmost  to  stop  the  sinking  of  the  revolutionary 
paper.  But  value  knows  its  own  laws,  and  follows 
them  in  spite  of  decrees  and  penalties." 

The  history  of  the  world  is  replete  with  examples  of 
nations  that  have  thought  to  get  over  hard  times  and 
become  suddenly  rich  by  depreciating  their  currency. 
The  wrecks  from  this  source  line  the  pages  of  history. 
Not  one  has  ever  succeeded,  and  not  one  ever  will 
succeed,  in  bettering  its  condition  by  depreciating  its 


2OI 

money  standard.  Our  people  must  learn  this  important 
truth,  and  the  sooner  they  do  so  the  better  it  will  be  for 
their  welfare.  I  take  the  liberty  of  quoting  the 
language  of  a  San  Francisco  writer  of  the  present,  in 
which  he  characterizes  the  ''perverse  spirit  of  the  times, 
as  everywhere  manifesting  itself  in  wild  aspirations  for 
impossible  advantages,  in  the  resurrection  of  the  dis- 
credited beliefs  and  methods  of  antiquity, — in  cutting 
loose  from  all  that  is  conservative, — in  a  reign  of 
unreason."  In  quest  of  what? 

I  repeat  that  honesty,  patience,  hard  work  and  fru- 
gality are  the  only  remedies  for  the  ills  we  have  largely 
drawn  upon  our  own  shoulders,  and  which  we  must 
bear  until  relieved  by  common-sense  methods  of  our 
own  devising. 

[From  News  Letter,  A  ugust  22, 1896.] 

Editor  News  Letter  : 

SIR  :  In  the  July  Overland  Mr.  Scott  says : 
"  In  the  United  States,  gold  and  silver  on  an  equal 
footing  and  at  an  established  parity  were  employed  as 
legal  money,  with  happy  effect,  from  1792  to  1873. 
During  this  period  of  eighty-one  years,  their  value 
lines  were  nearly  coincident,  and  doubtless  would  have 
so  continued  till  the  present  time  but  for  the  demon- 
etizing crime  of  silver  in  1873.  * 

u  Gold  monometallism  has  proved  highly  fluctuating 
— appreciated  over  100  per  cent  in  twenty-three  years — 
and  should  therefore  be  permanently  abolished.  Bi- 
metallism, long  tested,  proved  highly  efficient  in 
performing  all  the  duties  required  of  money,  and  there- 
fore may  safely  be  re-established,  and  ought  so  to  be." 

These  assertions  are  not  in  accord  with  the  facts  of 
history.  Bimetallism  is  impossible  in  the  United  States 


202 

under  the  independent,  unlimited  free  coinage  of  silver 
as  legal  tender  at  a  ratio  of  16  to  i,  or,  for  that  matter, 
at  any  other  ratio.  Prof.  Francis  A.  Walker,  the  ablest 
bimetallist  in  the  United  States,  says  in  the  preface  to 
his  recently  published  work,  "  International  Bimetal- 
lism :» 

"  Though  a  bimetallist  of  the  international  type  to 
the  very  center  of  my  being,  I  have  ever  considered  the 
efforts  made  by  this  country,  for  itself  alone,  to  rehabil- 
itate silver,  as  prejudicial  equally  to  our  own  national 
interests  and  to  the  cause  of  true  international  bimetal- 
lism. For  us  to  throw  ourselves  alone  into  the  breach, 
simply  because  we  think  silver  ought  not  to  have  been 
demonetized  and  ought  now  to  be  restored,  would  be  a 
piece  of  quixotism  unworthy  the  sound  practical  sense 
of  our  people." 

Referring  to  Mr.  Scott's  observations  on  due  propor- 
tions of  gold  and  silver,  I  would  remark,  the  "  due 
proportion  "  which  Mr.  Hamilton  and  Mr.  Jefferson 
considered  and  discussed  in  connection  with  coinage 
was  the  average  of  coinage  ratios  in  European  coun- 
tries. The  commodity  ratios  were  then  between  15 
and  1 6  to  i.  At  a  coinage  ratio  of  15^  to  i,  gold  dis- 
appeared ;  at  1 6  to  i,  silver  disappeared ;  now  the 
commodity  ratio  is  31  to  i,  and  of  course,  under  the  free 
coinage  of  silver  at  16  to  i,  all  gold  would  instantly 
disappear  from  current  circulation.  The  concurrence 
of  the  commercial  world  fixes  mercantile  ratios,  and 
the  United  States,  immense  as  it  is,  cannot  change 
them  by  free  coinage.  /  repeat,  that  a  coin  is  just  as 
bad  when  debased  by  overvaluation,  if  not  exchangeable 
for  better,  as  when  unduly  alloyed,  clipped  or  sweated. 


203 

General  Weaver,  in  his  speech  at  St.  Louis  pre- 
senting Hon.  W.  J.  Bryan  for  the  Populist  nomination, 
stated  that  the  issue  was  between  the  gold  standard, 
gold  bonds  and  bank  currency  on  the  one  hand,  and  the 
bimetallic  standard,  no  bonds  and  a  Government  cur- 
rency on  the  other,  asserting  that  the  conflict  can 
neither  be  postponed  nor  avoided.  Now  this  statement, 
divested  of  all  sophistry,  resolves  itself  into  this :  A 
gold  standard  of  value,  with  silver  as  auxiliary,  and  a 
currency  redeemable  in  money  of  intrinsic  equivalency 
upon  one  side,  and  upon  the  other  Government  fiat 
money.  That  is  just  what  it  means  in  the  end,  and 
there  need  be  no  doubt  about  it. 

I  had  the  opportunity  of  talking  with  a  leading  Cali- 
fornia Populist,  and  asked  him  if  it  was  the  belief  of  the 
people  whom  he  represented  that  the  par  of  the  metals 
could  be  maintained  under  independent,  unlimited  free 
coinage  on  a  ratio  of  16  parts  of  silver  to  i  of  gold, 
and  he  frankly  derided  the  possibility  of  such  a  thing, 
and  declared  that  the  Populists  advocated  the  indepen- 
dent, unlimited  free  coinage  of  silver  as  a  means  of 
discharging  debts  with  cheap  money,  and  that,  if  silver 
money  did  not  prove  cheap  enough,  they  would,  if 
intrusted  with  power,  resort  to  fiat  paper  money. 

Whether  the  gentlemen  who  cast  the  majority  vote 
for  free  silver  at  the  Chicago  Convention  will  make  so 
frank  an  admission  I  do  not  know,  but  Governor  Alt- 
geld  and  others  are  reported  as  clearly  defining  the 
contest  to  be  what  Henry  George  phrased  one  of 
the  "  House  of  Want  "  against  the  "  House  of  Have." 

In  discussing  money  the  advocates  of  the  inde- 
pendent, unlimited  free  coinage  of  silver  universally 


2O4 

ignore  the  natural  laws  of  money  (which  are  certain  to 
control  finally),  and  generally  display,  not  only  a  mis- 
apprehension of  the  essential  principles  of  money, 
that,  in  view  of  the  all-important  nature  of  the  subject, 
is  simply  astounding,  but  also  a  lamentable  unfamil- 
iarity  with  its  technical  and  legal  status. 

In  a  speech  of  the  present  Democratic  candidate  for 
President,  Hon.  W.  J.  Bryan,  delivered  before  the 
Trans-Mississippi  Congress  in  St.  Louis,  he  declared 
that  "true  bimetallism  means  that  the  value  of  a 
dollar  shall  be  regulated,  not  by  artificial  laws,  but  by 
the  natural  laws  of  supply  and  demand,"  and  then 
immediately  proceeds  to  controvert  his  own  position  by 
saying  that  the  coinage  ratio  shall  be  16  to  i,  when  the 
commercial  ratio  is  about  31  to  i.  The  natural  law  is 
that  coins  shall  be  equivalent  to  that  for  which  they 
are  accepted, — go  where  they  will.  The  imposition  of  a 
forced  ratio  and  legal-tender  quality  is  a  purely  arbi- 
trary and  artificial  arrangement,  and  sets  in  motion  the 
Gresham  Law.  Senator  Turpie,  as  chairman  of  a  silver 
convention  in  Indiana,  some  time  ago,  declared  that  the 
gold  coinage  of  the  country  was  fiat  to  the  extent  of 
10  per  cent,  and  predicated  his  entire  speech  upon 
this  erroneous  assumption.  Quite  recently  Governor 
Matthews  of  Indiana  declared  that  we  should  not 
make  gold  the  standard,  while  gold  has  specifically  been 
the  standard  for  twenty-three  years  and  by  custom  and 
mercantile  concurrence  for  sixty  years.  These  examples 
are  rivaled  by  silver  advocates  in  California,  who  set  at 
defiance  the  facts  of  history  and  teachings  of  economic 
science  in  their  insistence  on  empiricism  pure  and 
simple, — an  empiricism,  too,  that  has  encountered 


205 

countless  practical  illustrations  of  its  own  futility  ;  and 
Layman  is  constrained  to  say  that  Mr.  Scott  is  no 
exception  to  the  rule  ;  that  when  he  essayed  to  discuss 
money  he  selected  a  subject  with  which — its  laws, 
history  and  modern  functions — he  is  manifestly  not 
familiar. 

In  the  February  Overland  Mr.  Scott  says : 

"  Not  only  have  the  demonetizing  acts  with  respect 
to  silver  reduced  the  world's  redemption  money  fully 
fifty  per  cent,  but  they  have  palsied  its  powers  of  recu- 
peration, have  effected  a  scarcity  of  money,  and  thereby 
infested  otir  country's  doors  with  countless  packs  of 
ravenous  wolves" 

We  might  expect  such  an  utterance  from  Mr.  Debs, 
Governor  Altgeld,  Senator  Tillman  or  Professor   An- 
drews, but  not  from  a  level-headed  California  Repub- 
lican in  good  party  standing.     However,  greenback  and 
silver  legislation  is  chiefly  responsible  for  the  cloud  of 
doubt  that  hangs  over  our  financial  status,  that   de- 
presses industry  and  retards  the  return  of  prosperity. 
When  confidence  prevails,  the  activity  of  exchange  is 
at    once    manifest,    money   moves    about    rapidly,  is 
handled   everywhere,   and   seems   the  more   abundant 
because  of  its  general  distribution  ;  but  when  political 
commotion,  "false  doctrines,  heresy  and  schism  "  create 
alarm,  capital  halts,  money  moves  slowly,  is  frequently 
hoarded,  and  complaints  are  unjustly  made  of  its  absence. 
It  is  the  persistency  of  the  fiat  movement  that  causes 
capital  to   withdraw   from  investment  and   hold  aloof 
from  new  enterprises, — hence  the  continued  stagnation 
and  depression  of  business  in  the  United  States. 


206 

The  following  is  from  the  May  Overland  : 
"  The  Congressional  Act  of  1894,  throwing  wide  open 
the  gates  to  the  inflow  of  foreign  cheap  labor  products, 
has  operated  to  close  the  doors  of  many  American 
manufactories,  turn  vast  numbers  of  American  work- 
men into  the  streets,  reduce  the  price  of  labor  and 
American  products,  and  to  bring  gaunt  hunger  to 
many  an  otherwise  happy  home  of  the  country" 

Confronted  by  the  historical  lessons  cited  in  this 
series  of  papers,  and  familiar  to  all  well-informed  men, 
Mr.  Scott  must  perceive  the  unwisdom  of  such  rhetor- 
ical flourishes ;  the  uninformed  may  take  them  for 
facts,  and  thereby  cause  the  rapid  pace  at  which  the 
country  is  already  moving  toward  a  perverted  socialism 
to  be  further  accelerated. 

On  page  565  of  the  May  Overland  Mr.  Scott  says  : 
"  Monometallists  seem  to  regard  gold  as  supernal, 
divine.  The  cathode  rays  of  their  minds  photograph 
gold  only.  The  disposition  which  Moses,  the  divinely 
appointed  agent  for  promulgating  the  commands  of  the 
Great  Author  of  the  Decalogue,  made  of  the  golden 
calf  set  up  in  the  wilderness,  evidences  his  estimate 
with  respect  to  the  divinity  of  gold.  Permit  me 
respectfully  to  suggest  that  Layman  well  con  this 
cogent  lesson  of  the  great  Law  Giver." 

Layman  begs  to  assure  Mr.  Scott  that  he  cares  no 
more  for  gold  than  for  iron  or  coal,  but  considers  the 
subject  from  a  purely  historical  and  economical  stand- 
point. However,  as  it  is  alleged  that  Mr.  Scott  is  now 
a  Presidential  elector  for  the  Republican  party  (the 
party  that  committed  "the  crime  against  silver")  and 
on  the  present  gold  standard,  it  seems  in  order  to  ask 
him  if  he  is  disposed  to  con  the  cogent  lessons  of  the 


207 

great  Law  Giver  for  himself,  and  with  a  mind  receptive 
of  wise  precept.  On  the  presumption  that  he  is,  the 
following  is  submitted  to  his  consideration : 

*  Ye  shall  do  no  unrighteousness  in  judgment,  in 
meteyard,  in  weight  or  in  measure.  Just  balances,  just 
weights,  a  just  ephah,  and  a  just  hin,  shall  ye  have." 

Leviticus  xix  :  35,  36. 

Without  attempting  to  recapitulate  Mr.  Scott's  con- 
tention in  detail,  suffice  it  to  say  it  amounts  to  this, 
viz,  that  scarcity  of  money  and  nonprotection  of 
home  industries  are  the  causes  of  the  evils  which  now 
afflict  the  body  politic  and  social ;  and,  if  I  have  inter- 
preted him  aright,  that  more  money — free  silver — and 
higher  tariff  legislation  would  remedy  them. 

To  summarize  my  position  in  this  discussion  I  affirm 
that,  in  general,  what  the  country  needs  is  at  least  a 
rest  from  tariff  tinkering  and  a  reformed,  not  a  debased, 
currency,  with  more  common  sense,  honesty,  patience, 
hard  work  and  frugality,  and  maintain  as  follows  : 

First — I  recognize  the  peculiar  hardships  of  the 
American  wheat  farmer,  but  they  are  largely  because 
of  competition  with  Argentina  peons,  Indian  ryots  and 
Russian  peasants,  still  further  aggravated  by  the 
reduced  value  of  horses,  mules,  oats,  hay,  etc.,  owing 
to  steam  and  electric  power  on  street  railways,  and  the 
use  of  bicycles.  But  in  California  the  farmer's  obli- 
gations are  payable  in  gold,  and  the  unlimited  free 
coinage  of  silver  by  the  United  States,  which  would 
inevitably  drive  gold  out  of  current  circulation,  could 
not  remedy  but  would  aggravate  his  misfortunes,  and 
further  would  probably  bring  farm  laborers  to  the  same 
plight  as -their  foreign  competitors. 


208 

Second — That  the  welfare  of  the  whole  mass  of  man- 
kind is  finally  promoted  by  obtaining  cheaply  all  the 
necessaries  of  life,  if  it  can  be  shown  that  alongside  of 
these  lower  prices  for  life's  necessaries  wages  have  in 
the  main  increased,  and  they  have. 

Third — That  prices  of  commodities  move  in  obe- 
dience to  natural  and  inherent  causes,  independent  of 
circulating  money  quantities.  The  economic  phe- 
nomena of  the  past  fifty  years  demonstrates  this. 

Fourth — That  gold  and  silver  coins  never  have  in 
any  country  circulated  simultaneously,  concurrently 
and  indiscriminately,  as  legal  'tender,  at  a  fixed  ratio 
under  unrestricted  free  coinage  of  both  metals. 

Fifth — That  the  international  bimetallic  theory — 
the  quantitative  or  so-called  double-standard  pool 
theory — lacks  foundation  in  any  known  principle  of 
economic  law,  and  is  a  fallacy,  rejected  as  such  by 
most  modern  economists  and  financiers  of  credit  and 
renown,  and  by  every  Western  power  of  any  commer- 
cial importance  whatsoever. 

Sixth — That  by  natural  law  there  is  but  one  way  to 
provide  for  bimetallism  in  any  country,  and  that  is  to 
make  the  more  precious  metal  the  standard,  and  then  float 
such  an  amount  of  the  cheaper  metal  as  can  be  kept 
upon  an  undoubted  equality  through  interchangeability. 

Seventh — That  there  can  be  no  such  thing  as  a 
double  standard.  We  must  have  either  gold  or  silver 
for  our  standard. 

Eighth — That  Government  cannot  create  values,  and 
that  the  current  value  of  moneys  is  determined  inde- 
pendently of  the  decree  of  kings,  legislative  enact- 
ments, or  Government  fiat. 


209 

Ninth — That  a  coin  is  just  as  bad  when  debased  by 
overvaluation,  if  not  exchangeable  for  better,  as  when 
unduly  alloyed,  clipped  or  sweated. 

Tenth — That  there  never  was  a  contrivance  so  potent 
for  injuring  the  masses  of  mankind  as  so-called  cheap 
money. 

Eleventh — That  there  is  not  a  free-coinage  country 
in  the  world  to-day  that  is  not  on  a  silver  basis. 

Twelfth — That  there  is  not  a  gold-standard  country 
in  the  world  to-day  that  does  not  use  silver  as  money 
along  with  gold. 

Thirteenth — That  there  is  not  a  silver-standard 
country  in  the  world  to-day  that  uses  any  gold  as 
money  along  with  silver. 

Fourteenth — That  there  is  not  a  silver-standard  coun- 
try in  the  world  to-day  that  has  more  than  one-third  as 
much  money  in  circulation  per  capita  as  the  United 
States  has. 

Fifteenth — That  there  is  not  a  silver-standard  coun- 
try in  the  world  to-day  where  the  laboring  man  receives 
as  fair  pay  for  his  day's  work  as  he  now  does  in  the 
United  States  under  the  present  gold  standard. 

I  repeat :  There  can  be  no  such  thing  as  a  double- 
standard.  We  must  have  either  gold  or  silver  for  our 
standard. 

UNDER  WHICH  KING,  BEZONIAN  ? 

A  Layman  begs  permission  to  say  a  few  words  more. 
In  the  May  Overland,  page  566,  we  find  : 

"  It  is  to  be  apprehended  that  the  reader  will  perceive 
that  Layman's  comments  are  hypercritical,  evincing  an 


2IO 

aim  to  say  something  brilliantly  carping  rather  than  to 
present  truth.  The  writer  would  respectfully  *  com- 
mend him  to  a  prudent  husbandry  of  his  resources.'  ' 

As  a  measure  of  relief  to  Mr.  Scott's  solicitude  in 
advising  Layman  to  "  husband  his  resources,"  Layman 
answers  that  from  the  force  of  habit,  as  well  as  a  due 
regard  for  the  friendly  admonition,  he  has  carefully 
held  in  reserve  sundry  pages  of  manuscript  on  the 
subject  of  money  in  general,  and  silver  in  particular, 
which  can  be  drawn  upon  in  case  of  future  need. 

On  page  568,  same  number  of  the  magazine,  he 
observes : 

"Charity  suggests  that  Layman  may  be  (  mad.'  If 
he  be  so,  it  would,  in  view  of  his  utterances  as  to  the 
power  of  Government  to  create  value  by  statutory  en- 
actment, seem  the  acme  of  hyperbole  to  say,  '  Much 
learning  doth  make  thee  mad.'  " 

Now,  in  view  of  the  stubborn  facts  of  history,  past 
and  present,  does  Mr.  Scott  think  his  "  Hard  Times  " 
articles  entitle  him  to  distinction  for  "  much  learning?" 
A  Layman  cannot  perceive  that  his  expositions  are 
edifying,  nor  refrain  from  characterizing  his  statistics 
as  inaccurate,  his  assertions  as  erroneous,  his  infer- 
ences as  fallacious,  and  his  conclusions  as  lame  and 
impotent ;  wherefore  he  pronounces  them  unsatisfactory. 
Let  him  be  assured  that  A  Layman  has  not  been 
moved  by  any  desire  to  say  something  "  brilliantly 
carping,"  but,  considering  the  momentous  issues  before 
the  people,  is  sincerely  regretful  that  a  gentleman  of 
Mr.  Scott's  standing  should  have  gone  so  far  astray  in 
his  monetary  vagaries  and  Populistic  views  as  he  has, 


211 

for  it  is  calculated  to  make  the  judicious  grieve. 
"  Money  is  not  a  question  of  politics  or  sentiment,  but 
of  science  and  ethics.  It  comes  without  being  called 
and  goes  without  being  arrested,  is  deaf  to  advances 
and  insensible  to  threats. " 

When  Paul  stood  before  King  Agrippa  at  Csesarea, 
discoursing  of  righteousness  and  judgment  to  come, — 
things  the  haughty  Festus,  who  was  present,  did  not 
understand, — and  defended  himself  against  unjust 
accusations,  the  disdainful  remark  of  the  latter  was 
fitly  answered,  "  I  am  not  mad,  most  noble  Festus,  but 
speak  forth  the  words  of  truth  and  soberness" 

A  LAYMAN. 

P.  S. — Since  the  foregoing  was  written,  Mr.  Scott  is 
reported,  in  the  Examiner  of  the  i2th  inst.,  as  having 
spoken  before  a  Republican  meeting  at  Santa  Rosa,  and 
in  part  his  remarks  were  summarized  as  follows : 

"  He  controverted  the  statements  that  hard  times  had 
followed  the  so-called  demonetization  of  silver,  claiming 
that  the  period  since  that  alleged  act  had  been  one  of 
unexampled  prosperity.  He  declared  that  the  claim 
made  by  the  silver  men  that  the  restoration  of  free 
coinage  would  result  in  the  raising  of  prices  of  products 
and  labor  is  fallacious." 

A  Layman  is  pleased  to  observe  these  evidences  of 
conversion,  but  is  unable  to  perceive  how  Mr.  Scott  can 
reconcile  them  with  his  four  articles  on  "  Hard  Times  " 
in  the  Overland  Monthly  of  this  year,  except  upon 
the  assumption  that  a  great  light  has  shone  upon  him. 


212 

[From  News  Letter,  September  5,  i8g6.~\ 

Editor  News  Letter : 

SIR:  Recurring  to  the  subject  of  the  independent, 
unlimited  free  coinage  of  silver  by  the  United  States, 
the  question  has  been  simplified  by  the  action  of  the 
Chicago  Convention  in  its  declarations  and  nomina- 
tions. The  independent,  unlimited  free  coinage  of 
silver  by  the  United  States  means  silver  .monometal- 
lism ;  in  other  words,  a  silver  basis  only  for  the  money 
currency  of  this  country. 

The  most  recent  expressions  of  such  men  as  Moreton, 
Frewen  and  Dr.  Ahrendt  ("  clouds  they  are  without 
water,  carried  about  of  winds  ;  trees  whose  fruit  wither- 
eth,  without  fruit "),  in  the  readiness  they  show  to  have 
the  United  States  throw  itself  into  the  gulf  of  national 
bimetallism — that  is,  the  independent,  unlimited  free 
coinage  of  silver — remind  me  of  the  patriotic  attitude 
of  Arternus  Ward  during  our  Civil  War,  when  he 
declared  himself  willing  to  sustain  the  war  so  long  as 
there  were  any  of  his  wife's  relatives  left  to  send  to 
the  front. 

As  to  what  the  status  would  be  under  independent, 
unlimited  free  coinage  of  silver  by  this  country,  I  have 
repeatedly  referred  to  that  in  previous  articles,  and  as 
to  the  present  attitude  of  Mr.  Frewen,  Dr.  Ahrendt  and 
others,  who  claim  that  the  United  States  can  safely 
undertake  such  a  step,  I  herewith  oppose  thereto  the 
most  recent  expressions  of  Prof.  Francis  A.  Walker,  by 
odds  the  ablest  bimetallist  in  the  United  States,  and 
second  to  none  in  the  world : 

"  Though  a  bimetallist  of  the  international  type  to 
the  very  center  of  my  being,  I  have  ever  considered  the 


2I3 

efforts  made  by  this  country,  for  itself  alone,  to  rehabili- 
tate silver,  as  prejudicial  equally  to  our  own  national 
interests  and  to  the  cause  of  true  international  bimet- 
allism. For  us  to  throw  ourselves  alone  into  the  breach 
simply  because  we  think  silver  ought  not  to  have  been 
demonetized  and  ought  now  to  be  restored,  would.be  a 
piece  of  quixotism  unworthy  the  sound  practical  sense 
of  our  people." 

Prof.  Walker  further  says,  under  the  head  of  u  Silver 
Coinage  in  the  United  States :  " 

"  The  United  States  had  continued  the  mischievous 
policy  of  coining  silver  at  the  ratio  of  16  to  i,  which 
had  been  begun  under  the  Act  of  February  28,  1878, 
while  the  agitation  of  the  subject  throughout  the 
country  became  more  and  more  intense.  As  the  views 
and  wishes  of  those  who  have  not  failed  since  1876  to 
press  upon  the  public  mind  and  upon  the  attention  of 
Congress  the  importance  of  action  to  restore  silver  to  its 
former  rank  as  a  money  metal  have  differed  very  widely, 
it  seems  right  to  say  a  few  words  in  characterization  of 
the  classes  of  persons  in  the  United  States  who  have  been 
wont  to  call  themselves  bimetallists.  We  have,  first,  the 
inhabitants  of  the  silver-producing  States.  These  citi- 
zens have  what  is  called  a  particular  interest,  as  distinct 
from  a  participation  in  the  general  interest.  The  res- 
toration of  silver  to  the  position,  as  a  money  metal, 
which  it  occupied  down  to  1873,  would,  at  any  time 
during  the  past  fifteen  years,  have  meant  to  these 
people  a  higher  price  for  the  products  of  their  com- 
munity or  section,  perhaps  of  their  individual  properties. 
Their  interest  in  the  maintenance  of  silver  as  a  money 
metal  has  been  of  the  same  nature  as  the  interest  of 
Pennsylvanians  in  the  duties  on  pig  iron,  and  of  the 
citizens  of  Ohio  and  Michigan  in  the  duties  on  wool. 


214 

Silver  coinage  is  with  them  not  a  financial  but  an 
industrial  issue.  Although  the  silver-mining  industry 
of  the  country  is  not  large,  in  comparison  with  scores 
and  scores  of  others,  it  has  yet  been  able  to  exert  a 
high  degree  of  power  in  our  politics,  partly  because  of 
our  system  of  equal  representation  in  the  Senate,  partly 
because  of  the  eagerness  and  intensity  with  which  the 
object  has  been  pursued.  The  second  consists  of  those 
who,  without  any  particular  interest  in  the  production 
of  silver,  are  yet,  in  their  general  economic  views,  in 
favor  of  superabundant  and  cheap  money.  Among  the 
leaders  of  this  element  have  been  found  the  very  men 
who,  between  1868  and  1876,  were  foremost  in  advocat- 
ing the  greenback  heresy.  Beaten  on  the  issue  of 
greenback  inflation,  they  have  taken  up  the  issue  of 
silver  inflation.  They  have  adopted  the  cause  of  silver, 
not  because  silver  is  more  valuable  than  irredeemable 
paper  (which  they  prefer),  but  because  it  is,  and  more 
especially  because  it  promises  still  further  to  become, 
cheaper  than  gold  at  the  legal  ratio.  They  are  for 
depreciated  silver  because,  in  their  view,  it  is  the  next 
best  thing  (by  which  they  mean  what  we  should  call 
the  next  worst  thing)  to  greenbacks.  Those  who  con- 
stitute the  element  now  under  consideration  are  not 
true  birnetallists.  What  they  really  want  is  silver 
inflation. 

"  I  would  not  wish  to  be  understood  as  refusing  to 
regard  as  real  bimetallists  many  persons  who,  in  the 
situation  existing,  are  in  favor  of  the  free  coinage  of 
silver.  The  test  of  the  true  bimetallist  is  simply  this : 
Is  it  his  object  to  secure  an  absolute  or  approximate 
par-of-exchange  between  the  two  metals,  and  to  promote 
the  fullest  nse  of  both  as  money  which  may  be  con- 
sistent with  the  working  of  the  laws  of  trade?  If  this 
is  his  bona  fide  wish  and  purpose,  any  man  is  entitled 


215 

to  be  considered  a  bimetallist,  even  though  he  may 
propose  a  mistaken  policy  in  any  given  place  and  time. 
The  error  of  those  free-coinage  men  who  are  also  sin- 
cerely in  favor  of  the  larger  bimetallism  is  in  failing  to 
recognize:  (i)  that  the  time  has  passed  when  even 
France  herself  could  maintain  the  function  she  per- 
formed from  1803  to  1873,  so  greatly  have  the  stocks 
of  the  precious  metals  been  increased,  so  vast  is  now 
the  mass  of  securities  immediately  marketable,  so  much 
more  rapid  is  the  communication  of  news  and  the 
transportation  of  specie,  so  potent  has  been  the  influ- 
ence of  Germany  through  its  passing  over  from  the 
silver  to  the  gold  states,  so  much  have  trade  and  pro- 
duction developed  with  the  improvement  of  arts  and 
the  increase  of  population  ;  (2)  that  the  people  of  the 
United  States  normally  use  vastly  less  metal  money 
than  the  French  now  do,  or  than  the  French  did  in  the 
early  time,  and,  by  consequence,  this  country  is  not, 
and  has  never  been,  in  a  position  to  exert  an  equal 
effect  upon  the  market  for  the  money  metals. 

u  In  1889  and  1890  the  agitation  for  the  free  coinage 
of  silver  had  risen  to  such  a  height  as  to  threaten  the 
inauguration  of  a  system  which  would,  in  the  opinion 
of  all  conservative  men,  not  only  monometallists  but 
bimetallists,  have  speedily  brought  the  United  States 
to  silver  monometallism,  having  a  par-of-excKange 
with  the  East  and  with  the  states  of  South  America, 
but  with  a  large  and  fluctuating  premium  upon  gold. 
More  than  once  this  result  appears  to  have  been  averted 
only  by  the  aggressive  courage  and  stubborn  persis- 
tency of  a  few  members  of  the  House  of  Represen- 
tatives. The  Senate  at  this  time,  owing  largely  to  the 
system  of  equal  representation  of  States,  could  have 
furnished  no  barrier  to  such  a  movement ;  and  there 
was  great  doubt  whether  President  Harrison  would 


216 

interpose  the  executive  veto.  Under  these  circum- 
stances, with  the  plea  that  it  was  necessary  to  concede 
something  in  order  to  avert  free  coinage,  was  passed 
the  so-called  Sherman  bill  of  1890,  which  provided  for 
the  purchase  by  the  Treasury  of  4,500,000  ounces 'of 
silver  per  month.  This  measure  was  of  a  thoroughly 
mischievous  character  and  effect.  That  it  was  neces- 
sary to  make  this  concession  to  the  free-coinage  party, 
I,  for  one,  do  not  believe.  I  am  so  little  of  a  doctrinaire 
that  I  should  hesitate  to  say  that,  in  all  matters  political, 
flat  and  contemptuous  resistance  to  unreasonable  de- 
mands and  evil  measures  is  always  a  safe  policy ;  but 
my  study  of  financial  history  creates  an  increasing 
conviction  that  the  only  good  policy  in  dealing  with 
financial  crazes  is  to  fight  them,  without  asking  or 
giving  quarter.  The  men  of  1890,  to  whom  the  people 
had  entrusted  their  powers  of  legislation,  did  not  deal 
with  the  matter  in  this  spirit.  Doubtless  politics,  in 
the  lowest  sense  of  the  word,  entered  not  a  little  to 
affect  their  temper,  and  the  coming  presidential  election 
cast  its  baleful  shadow  before." 

Leaving  out  of  account  all  else,  we  will  now  proceed 
to  the  consideration  of  how  the  independent,  unlimited 
free  coinage  of  silver  would  affect  the  wage-earners  of 
this  country,  of  whom  I  am  one.  The  history  of  civil- 
ization, and  particularly  of  the  past  six  hundred  years, 
shows  conclusively  the  impossibility  of  maintaining  a 
parity  between  gold  and  silver  at  fixed  ratios  as  legal- 
tender  money  under  unlimited  free  coinage ;  and  the 
question  that  confronts  the  working  people  of  whatso- 
ever kind  or  character  in  this  country  is,  What  would 
be  the  purchasing  power  of  silver  standard  money,  under 
the  independent,  unlimited  free  coinage  of  silver,  as 


217 

compared  with  that  under  the  present  gold-standard 
money,  under  limited  Goverment  coinage  of  silver  and 
the  gold  par  maintained  by  Government?  A  silver 
dollar  has  now,  as  since  1878,  a  purchasing  power  of 
one  hundred  cents. 

Mr.  Mattias  Romero,  Minister  of  Mexico  to  the 
United  States,  said,  in  an  article  in  the  North  American 
Review )  June,  1895: 

"  It  is  rather  puzzling  and  bewildering  to  some  trav- 
elers who  go  from  this  country  to  Mexico  to  see  that  a 
United  States  silver  dollar  containing  less  silver  bullion 
than  a  Mexican  silver  dollar  was  exchanged  there  for 
two  Mexican  silver  dollars,  when  pure  silver  was  at 
about  fifty-nine  cents  an  ounce ;  but  in  such  an 
exchange  the  Mexican  silver  dollar  is  sold  for  the  price 
of  the  bullion  it  contains,  while  the  United  States  silver 
dollar  is  the  representative  of  a  gold  dollar,  and  is 
therefore  merchandise  bought  to  pay  debts  in  the 
United  States  or  Europe." 

Under  the  independent,  unlimited  free  coinage  of 
silver,  the  purchasing  power  of  a  silver  dollar — or  any 
sign  or  instrumentality  of  a  silver  dollar — would  be 
precisely  the  bullion  or  commodity  value  of  the  metal 
composing  it,  and  no  more.  A  Mexican  silver  dollar, 
with  six  grains  more  silver  than  our  standard  silver 
dollar,  is  worth  now  in  San  Francisco  just  53  cents; 
and  the  expectation  that  Government  fiat  would  make 
a  United  States  free  silver  dollar  good  for  a  purchasing 
power  of  one  hundred  cents  when  worth  only  fifty  odd 
cents  would  simply  be  disappointed,  and  the  holder 
would  find  himself  subjected  to  a  discount  in  the  way 
of  increased  prices  for  all  rents  paid  and  necessaries 


218 

purchased.  Would  each  and  every  such  holder  have 
power  under  such  circumstances  to  compel  his  employer 
to  raise  his  wages  correspondingly?  If  so,  the  present 
differs  from  all  former  times. 

If  the  laboring  men  of  this  country  wanted  to  sell 
silver,  or  were  now  being  paid  in  silver  on  a  free-coinage 
basis,  there  might  be  some  sense  in  it.  But  the  laboring 
men  of  this  country  are  practically  getting  paid  in  gold, 
not  silver.  What  good  will  it  do  a  man  who  doesn't 
own  silver,  who  doesn't  sell  silver,  who  now  gets  paid  in 
gold  values,  to  be  paid  in  silver  ? 

But  there  is  another  way  to  look  at  it.  Gold  means 
high  wages  to  the  laborer.  It  is  so  in  all  gold-using 
countries.  Recently,  Mr.  Cannon,  a  free  silver  delegate 
in  Congress  from  Utah,  alleged  first,  that  prices  of 
goods  were  low  here  because  they  were  measured  in 
gold,  and  then  that,  on  account  of  wages  here  being 
paid  in  gold, — which  was  costly, — and  wages  in  India, 
China  and  Japan  being  paid  in  silver, — which  was  worth 
only  one-half  what  it  had  been, — they  had  fifty  per  cent 
advantage,  and  that  therefore  there  was  danger  of  our 
manufactures  being  driven  from  the  world's  markets : 
which  means  their  wages  are  so  much  lower  than  ours, 
on  account  of  the  gold  standard  here,  that,  unless  our 
wages  are  reduced  to  theirs, — unless  prices  are  inflated 
here  in  this  country  so  that  our  gold  wages  will  buy  no 
more  than  their  silver  wages, — their  labor  will  tend  to 
drive  out  ours.  In  other  words,  the  free  silver  propa- 
ganda is  practically  a  proposition  to  cut  the  wages  of 
the  laborers  of  this  country  in  half,  in  order  to  increase 
the  profits  of  their  employers. 


219 

Sir  Henry  Meysey  Thompson  is  one  of  the  leading 
silver  advocates  of  England.  He  offered  a  prize  for 
the  best  essay  explaining  how  it  was  that  China  and 
India  and  other  silver-using  countries  were  getting  an 
advantage  over  England,  and  a  great  many  people  com- 
peted for  that  prize.  Mr.  Jamieson,  the  British  Consul 
at  Shanghai,  wrote  so  good  a  paper  that  he  was 
awarded  the  prize ;  and  that  essay  is  now  the  chief 
stock  in  trade  of  the  British  agitation  for  the  restora- 
tion of  silver.  Mr.  Jamieson  says  : 

"  Wages  in  the  gold-using  countries  have,  through  the 
appreciation  of  gold,  become  100  per  cent  dearer  than 
they  were  relatively  to  silver  wages ;  and  the  manufac- 
turer in  the  silver-standard  countries  can  obtain  his 
labor  at  half  the  cost  which  he  formerly  paid" 

and  gives  the  natural  result  thereof  in  these  words : 
"  while  old-established  industries  in  England  are  barely 
paying  expenses,  new  industries  in  India  are  arising 
and  paying  handsomely."  The  change  proposed  by 
silver  advocates  in  England  is  to  evade  these  gold  wages 
and  raise  prices  of  goods  so  that  the  British  workman, 
though  getting  the  same  nominal  wages  in  silver,  will 
really  get  only  half  the  actual  wages  he  gets  now, 
and  the  British  manufacturer  may  thus  be  enabled  to 
compete  with  the  Indian  manufacturer. 

A  somewhat  similar  view  is  taken  by  Seiior  Romero, 
the  Mexican  Minister  at  Washington,  in  his  North 
American  Review  article  already  mentioned,  when  he 
asserts  that  the  depreciation  of  silver  has  favored  Mexi- 
can capitalists  by  lowering  the  actual  wages  of  their 
employees.  There  is  the  silver  question  in  a  nutshell. 


220 

As  to  the  wage-earners,  it  is  simply  a  question  as  to 
whether  they  are  getting  too  high  wages.  They  may 
as  well  face  the  question.  If  wage-earners  believe  they 
are  getting  too  high  wages,  and  that  this  country  is 
suffering  in  consequence,  all  they  have  to  do  is  to 
accept  lower  wages ;  or,  if  they  prefer  a  roundabout  way, 
they  can  favor  the  independent,  unlimited  free  coinage 
of  silver,  and  practically  they  will  get  their  wages  cut 
down  one-half  without  any  further  trouble  on  their  part. 

The  earnings  from  wages  in  this  country  approxi- 
mate 7,200  million  dollars  per  annum,  and  the  scaling 
of  the  purchasing  power  of  the  money  received  for 
them  is  a  question  that  every  worker  must  consider. 
Let  each  then,  in  sober,  serious  earnest,  ask  himself  or 
herself,  How  would  it  affect  me  ?  I  can  see  no  reason, 
not  even  the  shadow  of  a  reason,  why  my  fellow- 
workmen  the  land  over — be  they  managers,  agents, 
clerks,  porters  or  laborers  of  whatever  kind — should 
deem  it  beneficial  to  be  paid  their  wages  in  silver,  really 
worth,  under  unlimited  free  coinage,  only  fifty  odd 
cents  to  the  dollar,  and  blindly  trust  to  the  fiat  of  the 
Government  for  its  (i.  e.^  the  silver)  having  had  the 
purchasing  power  of  one  hundred  cents  to  the  dollar 
conferred  upon  it.  That  were  a  thing  that  has  never 
been  achieved  in  any  period  of  human  history.  I 
repeat,  let  each  one  ask  himself  or  herself  this  question, 
How  would  it  affect  me  ?  Let  every  wage-earner  con- 
sider these  facts  now  while  he  has  the  option. 

One  of  the  most  pertinent  answers  put  forth  to  the 
claim  of  the  silver  advocates  that  the  policy  of  indepen- 
dent, unlimited  free  coinage  would  be  of  benefit  to  the 


221 

working  people  is  the  testimony  of  the  Mayor  of  El  Paso, 
Texas,  whose  position  on  the  border  line  certainly  en- 
ables him  to  know  the  absolute  truth  of  the  matters  he 
alleges,  while,  at  the  same  time,  it  constitutes  no  pre- 
sumptive evidence  that  he  is  actuated  by  a  desire  to 
furnish  aid  and  comfort  to  the  "  goldbugs."  Here  it 
is,  just  as  he  wrote  it  out  in  answer  to  an  inquiring 
correspondent : 

"  I,  R.  F.  Campbell,  Mayor  of  the  City  of  El  Paso, 
Texas,  hereby  certify  that  I  have  made  a  careful  and 
diligent  inquiry  into  the  wholesale  price  of  some  com- 
mon articles  of  merchandise  in  the  City  of  El  Paso, 
Texas,  and  in  the  City  of  Juarez,  Mexico,  just  across 
the  Rio  Grande,  and  at  this  date,  August  7,  1896,  the 
prices  of  the  following  articles  in  the  two  cities  are  as 
follows,  those  on  this  side  of  the  river  being  reckoned 
in  United  States  money  and  those  on  the  other  side  in 
Mexican  silver : 

la  United  States.         In  Mexico. 

Breakfast  bacon,  per  pound $  .n}4  $  •  32 

Ham,  per  pound 11%  .32 

Matches,  per  gross 60  i .  20 

Pickles,  in  five-gallon  kegs 2. 25  6. 50 

Vinegar,  in  five-gallon  kegs 60  i  .40 

Baking  soda,  per  dozen i  .06  2.40 

Salt,  in  two-pound  sacks 40  .90 

Macaroni,  per  pound 10  .25 

Royal  baking  powder 4 .  oo  9 .  oo 

Molasses,  per  gallon 75  1-69 

Beans,  per  pound 03  .17 

Cheese,  per  pound 12^  .  20 

Candles,  per  box 5-oo  II-75 

Catsup,  per  dozen .   2.00  6.25 

Jelly,  per  dozen ...2.00  5.00 

Dried  plums,  per  pound 1 1  -25 

Dried  apples  and  peaches,  per  pound 1 1  .25 

Dried  prunes,  per  pound 10  .20 


222 

In  United  States.         In  Mexico. 

Cornstarch,  per  dozen $i .  06  $1-90 

lyemon  extract,  per  dozen ...    i .  oo  i .  90 

Vanilla  extract,  per  dozen 2.25  3 .  oo 

Arbuckle's  coffee,  per  pound 20  .40 

Soap,  per  box 3.75  5.00 

Tea,  per  pound 35  to  i .  oo       .  70  to  i .  50 

Deviled  ham,  per  dozen 2. go  6 . 50 

Sugar,  per  sack  of  100  pounds 5 . 50  10 . 75 

Flour,  per  sack  of  100  pounds 2 .  25  6 . 50 

Rice,  per  pound 05  .11 

Condensed  milk,  per  case 8 .  oo  2 1 . 50 

Canned  tomatoes,  per  case 2.25  7 . 90 

Canned  peas,  per  case 2 . 40  8 . 50 

Crackers,  per  pound °7/^  .21^ 

"  The  Mexican  prices  are  the  prices  which  prevail  in 
the  free  zone,  on  which  there  is  a  small  dnty.  Of 
conrse,  in  the  interior  they  would  be  much  higher. 
I  also  find  and  do  hereby  certify  that  Mexican  labor  in 
Mexico  in  the  larger  cities  is  paid  75  cents  to  $1.50 
per  day  in  Mexican  silver.  The  highest  price  for  the 
very  best  and  most  skilled  labor  is  $2  per  day  in  the 
same  kind  of  money.  In  the  interior  of  Mexico,  in  the 
country  and  smaller  cities,  the  wages  paid  are  from 
twenty  per  cent  to  thirty  per  cent  lower  than  that 
given  above. 

"  Given  under  my  hand  and  seal  of  office  on  this 
seventh  day  of  August,  A.  D.  1896. 

"R.  F.  CAMPBELL, 

"  Mayor  of  El  Paso,  Texas." 

We  have  been  especially  treating  of  wage-earners. 
Let  us  now  consider  savings  bank  depositors  (largely 
composed  of  that  class)  in  the  single  State  of  California. 
The  records  show  as  follows  : 

1870— depositors,    47>535i  deposits,!  3^,555,909 

1896—         "  169,856;         "  132,422,351 


223 

Here  is  an  increase  in  dollars  of  266  per  cent  and  an 
increase  in  the  number  of  depositors  of  261  per  cent  in 
twenty-five  years.  This  State  is  the  richest  per  capita 
of  any  in  the  Union — in  round  figures,  $2,100  per  head. 
Let  these  169,856  industrious,  prudent,  frugal  wage- 
earners  ask  themselves  if  their  interest  will  be  pro- 
moted by  the  independent,  unlimited  free  coinage  of 
silver. 

The  foregoing  furnishes  object  lessons  that  every 
wage-earner,  particularly  every  voter,  should  study, 
with  a  view  to  the  proper  determination  of  the  question 
upon  the  basis  of  "  enlightened  self-interest." 

I  am  a  Democrat  of  the  straightest  sect  of  Jefferson, 
Jackson,  Benton,  Tilden  and  Cleveland,  and  I  insist 
that  a  coin  is  just  as  bad  when  debased  by  overvaluation, 
if  not  exchangeable  for  better,  as  when  unduly  alloyed, 
clipped  or  sweated. 

JOHN  J.  VALENTINE. 


,;-... 


THIS  BOOK  IS  DUE  ON  THE  LAST  DATE 
STAMPED  BELOW 


AN  INITIAL  FINE  OF  25  CENTS 

WILL  BE  ASSESSED  FOR  FAILURE  TO  RETURN 
THIS  BOOK  ON  THE  DATE  DUE.  THE  PENALTY 
WILL  INCREASE  TO  SO  CENTS  ON  THE  FOURTH 
DAY  AND  TO  $1.OO  ON  THE  SEVENTH  DAY 
OVERDUE. 


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LD  21-95m-7,'37 

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